Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Cadence Design Systems Popped Today

By Timothy Green – Apr 24, 2018 at 1:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A solid first quarter plus better-than-expected guidance led investors to push up the stock.

What happened

Shares of Cadence Design Systems (CDNS -0.77%) jumped on Tuesday after the provider of design solutions for integrated circuits and electronic devices reported its first-quarter results. The company beat analyst estimates for both revenue and earnings, and it provided guidance that came in above analyst expectations. As of 1 p.m. EDT, the stock was up about 9.5%.

So what

Cadence reported first-quarter revenue of $517.3 million, up 8.5% year over year and $12 million above the average analyst estimate. Product and maintenance revenue was $480.6 million, up 6.5% year over year, while services revenue was $36.7 million, up 43.9%.

A rising stock chart.

Image source: Getty Images.

Non-GAAP net income came in at $0.40 per share, $0.03 higher than analysts were expecting. Under the old revenue reporting rules used during the prior-year period, non-GAAP EPS would have been $0.44, up from $0.32 during the first quarter of 2017.

"The Data-Driven Economy is being propelled by key technology waves of mobile, cloud/datacenter, edge computing, automotive, and most significantly machine learning, all driving increasing design activity. This is driving broad-based customer demand for our innovative System Design Enablement solutions that, along with strong execution, contributed to our excellent financial performance in the first quarter," said CEO Lip-Bu Tan.

Now what

Cadence expects to report second-quarter revenue between $510 million and $520 million, compared to analyst expectations of $505.5 million. Second-quarter non-GAAP EPS is expected between $0.39 and $0.41, above the $0.38 analysts were expecting.

For the full year, Cadence sees revenue between $2.055 billion and $2.085 billion, and non-GAAP EPS between $1.57 and $1.65. The consensus analyst estimate for full-year revenue was $2.04 billion.

With a solid first-quarter report, shares of Cadence have regained some ground lost since the beginning of the year. An analyst upgrade from Needham helped the stock along on Tuesday, but it still has a ways to go before reclaiming its 52-week high.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Cadence Design Systems, Inc. Stock Quote
Cadence Design Systems, Inc.
$163.43 (-0.77%) $-1.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.