Cadence Design Systems (CDNS) closed the most recent trading day at $325.68, moving +1.93% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.41%. Meanwhile, the Dow lost 0.07%, and the Nasdaq, a tech-heavy index, added 1.11%.
Coming into today, shares of the maker of hardware and software products for validating chip designs had gained 12.94% in the past month. In that same time, the Computer and Technology sector lost 0.92%, while the S&P 500 gained 1.46%.
The investment community will be paying close attention to the earnings performance of Cadence Design Systems in its upcoming release. The company is slated to reveal its earnings on October 26, 2026. The company's earnings per share (EPS) are projected to be $2.04, reflecting a 5.7% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.61 billion, up 20.27% from the year-ago period.
For the full year, the Zacks Consensus Estimates are projecting earnings of $8.13 per share and revenue of $6.32 billion, which would represent changes of +13.87% and +19.31%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Cadence Design Systems. These recent revisions tend to reflect the evolving nature of short-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.19% higher. Right now, Cadence Design Systems possesses a Zacks Rank of #2 (Buy).
From a valuation perspective, Cadence Design Systems is currently exchanging hands at a Forward P/E ratio of 39.28. For comparison, its industry has an average Forward P/E of 16.4, which means Cadence Design Systems is trading at a premium to the group.
It is also worth noting that CDNS currently has a PEG ratio of 2.69. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computer - Software was holding an average PEG ratio of 1.34 at yesterday's closing price.
The Computer - Software industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 65, placing it within the top 27% of over 250 industries.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
To follow CDNS in the coming trading sessions, be sure to utilize Zacks.com.
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Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).