Investors in cash trouble should check out Cadence Design Systems Inc. (CDNS)

Cadence Design Systems Inc. (NASDAQ: CDNS) stock jumped 2.00% on Friday to $185.58 against a previous-day closing price of $181.95. With 1.6 million shares changed hands, the volume of the stock remained lighter than its average volume of 1.61 million shares. During the session, the Software – Application company that operates in wider Technology sector, reached to the highest price of $185.63 whereas the lowest price it dropped to was $181.32. The 52-week range on CDNS shows that it touched its highest point at $192.70 and its lowest point at $132.32 during that stretch. It currently has a 1-year price target of $194.35. Beta for the stock currently stands at 1.14.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of CDNS was up-trending over the past week, with a rise of 1.07%, but this was up by 18.93% over a month. Three-month performance surged to 17.20% while six-month performance rose 21.19%. The stock gained 22.84% in the past year, while it has lost -0.41% so far this year. A look at the trailing 12-month EPS for CDNS yields 2.80 with Next year EPS estimates of 4.59. For the next quarter, that number is 0.96. This implies an EPS growth rate of 18.20% for this year and 12.19% for next year. EPS is expected to grow by 17.70% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 29.10%.

Float and Shares Shorts:

At present, 277.14 million CDNS shares are outstanding with a float of 272.06 million shares on hand for trading. On Jul 14, 2022, short shares totaled 3.73 million, which was 1.36% higher than short shares on Jun 14, 2022. In addition to Mr. Lip-Bu Tan as the firm’s Exec. Chair of the Board, Dr. Anirudh Devgan Ph.D. serves as its CEO, Pres & Director.

Institutional Ownership:

Through their ownership of 89.34% of CDNS’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 60.54% of CDNS, in contrast to 5.18% held by mutual funds. Shares owned by individuals account for 30.78%. As the largest shareholder in CDNS with 11.11% of the stake, The Vanguard Group, Inc. holds 30,647,826 shares worth 30,647,826. A second-largest stockholder of CDNS, Massachusetts Financial Services, holds 19,652,441 shares, controlling over 7.13% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in CDNS, holding 16,271,008 shares or 5.90% stake. With a 3.13% stake in CDNS, the MFS International Intrinsic Value is the largest stakeholder. A total of 8,637,057 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.95% of CDNS stock, is the second-largest Mutual Fund holder. It holds 8,131,463 shares valued at 1.22 billion. Vanguard Mid Cap Index Fund holds 2.30% of the stake in CDNS, owning 6,348,960 shares worth 952.53 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for CDNS since 14 analysts follow the stock currently. There are 7 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 6 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With CDNS analysts setting a high price target of $215.00 and a low target of $148.50, the average target price over the next 12 months is $190.46. Based on these targets, CDNS could surge 15.85% to reach the target high and fall by -19.98% to reach the target low. Reaching the average price target will result in a growth of 2.63% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. CDNS will report FY 2022 earnings on 02/21/2023. Analysts have provided yearly estimates in a range of $4.36 being high and $3.92 being low. For CDNS, this leads to a yearly average estimate of $4.11. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Cadence Design Systems Inc. surprised analysts by $0.12 when it reported $1.08 EPS against a consensus estimate of $0.96. The surprise factor in the prior quarter was $0.15. Based on analyst estimates, the high estimate for the next quarter is $0.97 and the low estimate is $0.89. The average estimate for the next quarter is thus $0.95.

Summary of Insider Activity:

Insiders traded CDNS stock several times over the past three months with 15 Buys and 34 Sells. In these transactions, 185,799 shares were bought while 307,307 shares were sold. The number of buy transactions has increased to 45 while that of sell transactions has risen to 139 over the past year. The total number of shares bought during that period was 793,076 while 1,066,477 shares were sold.

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