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Synopsys (SNPS) to Report Q4 Earnings: What's in the Cards?

Synopsys SNPS is slated to report fourth-quarter fiscal 2022 results on Nov 30.

The company anticipates revenues between $1.263 billion and $1.293 billion for the fiscal fourth quarter. The Zacks Consensus Estimate for the same is pegged at $1.28 billion, suggesting growth of 11% from the year-ago period.

Synopsys expects non-GAAP earnings between $1.80 and $1.85 per share. The Zacks Consensus Estimate of $1.84 per share indicates an improvement of 1.1% year over year.

The software company surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3%.

 

Synopsys, Inc. Price and EPS Surprise

Synopsys, Inc. Price and EPS Surprise
Synopsys, Inc. Price and EPS Surprise

Synopsys, Inc. price-eps-surprise | Synopsys, Inc. Quote

Factors Ahead of Q4 Results

During fiscal fourth-quarter, the increasing global design activity and customer engagements are likely to have been Synopsys’ growth drivers.  Its Q4 performance is likely to have benefited from the growing demand for its solid product portfolio.

Growing impact of artificial intelligence (AI), fifth-generation (5G), the Internet of Things, high-performance computing, the Cloud and automotive is anticipated to have boosted demand for Synopsys’ advanced solutions during the fourth quarter fiscal 2022. The company is likely to have gained from growth in Custom Compiler, which is fueled by the large deal wins in the 5G, AI and server chip markets.

The ongoing shift to high-performance cloud computing due to the growing hybrid working environment is expected to have aided demand for the company’s Intellectual Property (IP) solutions, such as Peripheral Component Interconnect Express 5.0 & 6.0, 800G Ethernet and DDR5 memory.

Strong adoption of interface and foundation IP solutions are likely to have boosted revenues for SNPS’s interface portfolio. Additionally, widespread contract wins and the increasing deployment of the Fusion Platform, including Fusion Compiler, might drive the company’s fiscal fourth-quarter results.

Synopsys’ partnership with industry leaders like Microsoft and Taiwan Semiconductor Manufacturing Company is expected to have accelerated the deployment of its cloud solutions, which might have aided the company’s top line during the quarter under review.

The company’s solid electronic design automation software partner base, which includes Advanced Micro Devices, Juniper Networks, Realtek, Toshiba and Wolfson, is likely to have served as a major revenue driver.

Increased design investments in Synopsys’ ARC processors by automotive companies are an upside. Besides, strong adoption of security solutions for interfaces such as PCI Express, CXL and DDR, with over 30 design wins across all market segments, is a positive.

However, component supply constraints are also expected to have partially offset the benefits of the aforementioned factors. Apart from this, the heightening competition from the likes of Cadence Design Systems might have played a spoilsport.

What Our Model States

Our proven model does not conclusively predict an earnings beat for Synopsys this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Synopsys has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Per our model, Dollar General DG, MongoDB MDB and Okta OKTA are some stocks that investors can consider, as these have the right combination of elements to post an earnings beat in their upcoming releases.
 
Dollar General has an Earnings ESP of +1.58% and currently carries a Zacks Rank #2. The company is slated to report its third-quarter fiscal 2023 results on Dec 1. DG’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 2.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
The Zacks Consensus Estimate for Dollar General’s fiscal third-quarter earnings stands at $2.55 per share, implying a year-over-year increase of 22.6%. DG is estimated to report revenues of $9.43 billion, which suggests a surge of 10.7% from the year-ago quarter.
 
MongoDB has an Earnings ESP of +1.66% and a Zacks Rank #3. The company is scheduled to report its third-quarter fiscal 2023 results on Dec 6. MDB’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 113.7%.
 
The Zacks Consensus Estimate for MDB’s fiscal third-quarter loss is pegged at 17 cents per share, indicating a 54.6% fall from the year-ago quarter’s loss of 11 cents. The consensus mark for revenues stands at $302.4 million, suggesting a year-over-year increase of 33.3%.
 
Okta has an Earnings ESP of +0.71% and carries a Zacks Rank #3 at present. The company is set to report its third-quarter fiscal 2023 results on Nov 30. OKTA’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 45.5%.
 
The Zacks Consensus Estimate for quarterly loss is pegged at 24 cents per share, suggesting a year-over-year decrease of 242.9%. OKTA’s quarterly revenues are estimated to increase 32.2% year over year to $463.6 million.
 
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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