Cadence Design Systems (CDNS) Outpaces Stock Market Gains: What You Should Know

Cadence Design Systems (CDNS) closed at $72.67 in the latest trading session, marking a +1.72% move from the prior day. This change outpaced the S&P 500's 0.95% gain on the day. Meanwhile, the Dow gained 0.94%, and the Nasdaq, a tech-heavy index, added 0.8%.

Heading into today, shares of the maker of hardware and software products for validating chip designs had gained 10.38% over the past month, outpacing the Computer and Technology sector's gain of 0.95% and the S&P 500's gain of 2.47% in that time.

Investors will be hoping for strength from CDNS as it approaches its next earnings release. In that report, analysts expect CDNS to post earnings of $0.53 per share. This would mark year-over-year growth of 17.78%. Our most recent consensus estimate is calling for quarterly revenue of $579.07 million, up 11.71% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.10 per share and revenue of $2.32 billion, which would represent changes of +12.3% and +8.53%, respectively, from the prior year.

Any recent changes to analyst estimates for CDNS should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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, 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 past month, the Zacks Consensus EPS estimate remained stagnant. CDNS is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note CDNS's current valuation metrics, including its Forward P/E ratio of 34.08. Its industry sports an average Forward P/E of 29.67, so we one might conclude that CDNS is trading at a premium comparatively.

It is also worth noting that CDNS currently has a PEG ratio of 3.1. 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. The Computer - Software was holding an average PEG ratio of 2.27 at yesterday's closing price.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 166, putting it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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