Why Cadence Design Systems (CDNS) Outpaced the Stock Market Today

In the latest market close, Cadence Design Systems (CDNS) reached $304.41, with a +0.98% movement compared to the previous day. The stock exceeded the S&P 500, which registered a gain of 0.73% for the day. At the same time, the Dow added 0.16%, and the tech-heavy Nasdaq gained 0.98%.

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Coming into today, shares of the maker of hardware and software products for validating chip designs had lost 3.33% in the past month. In that same time, the Computer and Technology sector gained 3.28%, while the S&P 500 gained 0.34%.

Market participants will be closely following the financial results of Cadence Design Systems in its upcoming release. The company’s upcoming EPS is projected at $1.82, signifying a 31.88% increase compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $1.35 billion, indicating a 26.13% increase compared to the same quarter of the previous year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $5.91 per share and a revenue of $4.63 billion, indicating changes of +14.76% and +13.28%, respectively, from the former year.

Investors should also take note of any recent adjustments to analyst estimates for Cadence Design Systems. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts’ confidence in the company’s business performance and profit potential.

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Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Cadence Design Systems is currently a Zacks Rank #3 (Hold).

In terms of valuation, Cadence Design Systems is presently being traded at a Forward P/E ratio of 50.97. Its industry sports an average Forward P/E of 31.48, so one might conclude that Cadence Design Systems is trading at a premium comparatively.

It is also worth noting that CDNS currently has a PEG ratio of 3.28. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company’s anticipated earnings growth rate. The Computer – Software industry had an average PEG ratio of 2.32 as trading concluded yesterday.

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