Cadence Design Systems (CDNS) closed the most recent trading day at $63.52, moving +1.39% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.67%. Meanwhile, the Dow gained 0.82%, and the Nasdaq, a tech-heavy index, added 0.78%.
Heading into today, shares of the maker of hardware and software products for validating chip designs had gained 9.43% over the past month, outpacing the Computer and Technology sector's gain of 2.27% and the S&P 500's gain of 1.25% in that time.
Wall Street will be looking for positivity from CDNS as it approaches its next earnings report date. On that day, CDNS is projected to report earnings of $0.50 per share, which would represent year-over-year growth of 25%. Meanwhile, our latest consensus estimate is calling for revenue of $567.11 million, up 9.63% from the prior-year quarter.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.04 per share and revenue of $2.28 billion. These totals would mark changes of +9.09% and +6.74%, respectively, from last year.
Investors might also notice recent changes to analyst estimates for CDNS. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
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.
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. Over the past month, the Zacks Consensus EPS estimate has moved 0.48% higher. CDNS currently has a Zacks Rank of #1 (Strong Buy).
In terms of valuation, CDNS is currently trading at a Forward P/E ratio of 30.66. For comparison, its industry has an average Forward P/E of 30.18, which means CDNS is trading at a premium to the group.
Investors should also note that CDNS has a PEG ratio of 2.56 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Computer - Software stocks are, on average, holding a PEG ratio of 2.14 based on yesterday's closing prices.
The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 17, putting it in the top 7% 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.
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