Cadence Design Systems Inc
CDNS
is scheduled to release second-quarter 2022 results on Jul 25.
For the second quarter, Cadence expects total revenues in the range of $825-$845 million. The Zacks Consensus Estimate for revenues is currently pegged at $837.1 million, suggesting an increase of 14.9% year over year.
Cadence Design Systems, Inc. Price and EPS Surprise
Management projects non-GAAP earnings in the range of 95-99 cents per share. The consensus mark for earnings has been steady at 97 cents in the past 30 days, indicating an increase of 12.8% from the prior-year quarter’s reported figure.
The company has a trailing four-quarter earnings surprise of 10.6%, on average. Shares of Cadence have gained 14.8% in the past year compared with the
industry
’s decline of 15.7%.
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Factors to Note
Strength across the solutions’ portfolio and increasing demand especially for hardware products are likely to drive Cadence’s performance in the to-be-reported quarter.
Deployment of 5G, increasing usage of hyperscale computing and emerging technologies like Artificial Intelligence and machine learning are fueling digital transformation across various end markets and boosting demand for advanced semiconductors chips.
Acceleration in chip design activity and increasing system design complexity is expected to have boosted demand for Cadence’s system design and verification solutions among semiconductor companies in the to-be-reported quarter.
Continued momentum witnessed in the company’s digital & signoff, custom & analog and IP solutions and an improving backlog are likely to have acted as a tailwind. The company’s system design & analysis segment is likely to have benefited from increasing presence in domains like 5G, aerospace & defense, wireless and communications.
The introduction of new products and strong uptake of the company’s existing solutions like Palladium Z2 and the Protium X2 systems, Clarity 3D Transient Solver, Sigrity-X, Xcelium Logic, Spectre X Simulator, Smart JasperGold and Tensilica Vision Q7 is likely to have driven second-quarter performance.
In June 2022, Cadence
announced
the launch of 15 Verification IP (VIP) solutions that enable customers across industrial, automotive, hyperscale data center and mobile domains to develop system-on-chip (SoC). The new VIPs provide customers with access to a consistent API with bus function models, integrated protocol checks and coverage models, which, in turn, facilitate rapid adoption.
Various strategic collaborations also bode well for Cadence. In June 2022, Cadence
collaborated
with Arm and Intel Foundry Services (“IFS”). The collaboration with Arm was aimed at speeding up the mobile device silicon success by combining Cadence digital and verification tools and the Arm Total Compute Solutions 2022 (TCS22). The collaboration with IFS was aimed at addressing complex design workloads for SoCs and accelerating time-to-market.
Synergies from the Integrand and AWR buyouts and the recent acquisitions of Pointwise and NUMECA are anticipated to have contributed to the company’s top line.
Increasing expenses on product development amid stiff competition in the electronic design automation space might have impeded margin expansion in the quarter to be reported.
What Our Model Says
Our proven model does not predict an earnings beat for Cadence this time around. The combination of a positive
Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Cadence 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.
Stocks to Consider
Here are some stocks you may consider as our model shows that these have the right combination of elements to beat earnings this season.
SAP SE
SAP
has an Earnings ESP of +2.82% and currently carries a Zacks Rank #2. SAP is slated to release quarterly numbers on Jul 21. You can see
the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SAP’s to-be-reported quarter’s earnings and revenues is pegged at $1.15 per share and $7.68 billion, respectively. SAP surpassed earnings estimates in three of the preceding four quarters, delivering an average surprise of 19.8%. Shares of SAP have lost 33.5% in the past year.
Schlumberger Limited
SLB
has an Earnings ESP of +1.15% and currently has a Zacks Rank #2. Schlumberger is scheduled to report earnings results on Jul 22.
The Zacks Consensus Estimate for Schlumberger’s to-be-reported quarter’s earnings and revenues is pegged at 40 cents per share and $6.28 billion, respectively. Schlumberger surpassed earnings estimates in the preceding four quarters, delivering an average surprise of 6.7%. Shares of SLB have gained 20.4% in the past year.
NextEra Energy Partners, LP
NEP
has an Earnings ESP of +49.01% and currently carries a Zacks Rank of 2. NextEra Energy Partners is set to announce quarterly figures on Jul 22.
The Zacks Consensus Estimate for NextEra Energy’s to-be-reported quarter’s earnings and revenues is pegged at 30 cents per share and $398.3 million, respectively. Shares of NEP have gained 0.2% in the past year.
Stay on top of upcoming earnings announcements with the Zacks
Earnings Calendar.
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