Cadence Design Systems (CDNS) Rises Yet Lags Behind Market: Some Facts Worth Knowing

Cadence Design Systems (CDNS) closed the most recent trading day at $277.87, moving +2.58% from the previous trading session. This move lagged the S&P 500's daily gain of 2.91%. Meanwhile, the Dow gained 2.49%, and the Nasdaq, a tech-heavy index, added 3.83%.

The maker of hardware and software products for validating chip designs's stock has dropped by 10.71% in the past month, falling short of the Computer and Technology sector's loss of 9.45% and the S&P 500's loss of 7.64%.

The upcoming earnings release of Cadence Design Systems will be of great interest to investors. In that report, analysts expect Cadence Design Systems to post earnings of $1.89 per share. This would mark year-over-year growth of 20.38%. At the same time, our most recent consensus estimate is projecting a revenue of $1.43 billion, reflecting a 15.02% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $8.11 per share and a revenue of $5.99 billion, demonstrating changes of +13.59% and +13%, respectively, from the preceding year.

Investors might also notice recent changes to analyst estimates for Cadence Design Systems. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.19% decrease. At present, Cadence Design Systems boasts a Zacks Rank of #3 (Hold).

Looking at valuation, Cadence Design Systems is presently trading at a Forward P/E ratio of 33.41. This signifies a premium in comparison to the average Forward P/E of 16.52 for its industry.

It's also important to note that CDNS currently trades at a PEG ratio of 2.61. 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. As of the close of trade yesterday, the Computer - Software industry held an average PEG ratio of 1.31.

The Computer - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 69, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

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Cadence Design Systems, Inc. (CDNS): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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