It is Poised to be a Bull Market for Cadence Design Systems Inc. (CDNS)

Cadence Design Systems Inc. (NASDAQ: CDNS) stock jumped 10.22% on Thursday to $224.49 against a previous-day closing price of $203.67. With 3.82 million shares changed hands, the volume of the stock remained heavier than its average volume of 1.8 million shares. During the session, the Software – Application company that operates in wider Technology sector, reached to the highest price of $225.46 whereas the lowest price it dropped to was $208.50. The 52-week range on CDNS shows that it touched its highest point at $219.09 and its lowest point at $138.76 during that stretch. It currently has a 1-year price target of $227.11. Beta for the stock currently stands at 1.06.

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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 3.53%, but this was up by 10.25% over a month. Three-month performance surged to 15.87% while six-month performance rose 35.89%. The stock gained 55.90% in the past year, while it has gained 39.75% so far this year. A look at the trailing 12-month EPS for CDNS yields 3.12 with Next year EPS estimates of 5.72. For the next quarter, that number is 1.18. This implies an EPS growth rate of 23.70% for this year and 13.73% for next year. EPS is expected to grow by 17.54% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 51.80%.

Float and Shares Shorts:

At present, 272.68 million CDNS shares are outstanding with a float of 270.03 million shares on hand for trading. On Apr 27, 2023, short shares totaled 3.39 million, which was 1.24% higher than short shares on Mar 30, 2023. In addition to Dr. Anirudh Devgan Ph.D. as the firm’s CEO, Pres & Director, Mr. John M. Wall serves as its Sr. VP & CFO.

Institutional Ownership:

Through their ownership of 91.75% of CDNS’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 58.54% of CDNS, in contrast to 5.03% held by mutual funds. Shares owned by individuals account for 32.80%. As the largest shareholder in CDNS with 9.95% of the stake, The Vanguard Group, Inc. holds 27,126,095 shares worth 27,126,095. A second-largest stockholder of CDNS, BlackRock Fund Advisors, holds 15,852,462 shares, controlling over 5.81% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in CDNS, holding 11,406,581 shares or 4.18% stake. With a 3.11% stake in CDNS, the Vanguard Total Stock Market ETF is the largest stakeholder. A total of 8,475,761 shares are owned by the mutual fund manager. The Vanguard 500 Index Fund, which owns about 2.36% of CDNS stock, is the second-largest Mutual Fund holder. It holds 6,438,559 shares valued at 1.35 billion. Government Pension Fund – Global holds 1.78% of the stake in CDNS, owning 4,840,743 shares worth 1.01 billion.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Mar 30, 2023, CDNS reported revenue of $857.52M and operating income of $282.90M. The EBITDA in the recently reported quarter was $281.57M and diluted EPS was $0.68.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for CDNS since 0 analysts follow the stock currently. 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 $240.00 and a low target of $210.00, the average target price over the next 12 months is $226.25. Based on these targets, CDNS could surge 6.91% to reach the target high and fall by -6.45% to reach the target low. Reaching the average price target will result in a growth of 0.78% 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.

Summary of Insider Activity:

Insiders traded CDNS stock several times over the past three months with 12 Buys and 61 Sells. In these transactions, 236,021 shares were bought while 386,107 shares were sold. The number of buy transactions has increased to 34 while that of sell transactions has risen to 202 over the past year. The total number of shares bought during that period was 744,007 while 1,417,058 shares were sold.

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