Why I’m Kicking Myself For Missing Out On Cadence Design Systems, Inc. (CDNS)?

The exact reason why investors have been taking up Cadence Design Systems, Inc. (NASDAQ:CDNS) stock at a frenetic pace might seem like a bit of a head-scratcher at the moment, but that’s only if you are buying the stock for the wrong reasons. On 14 March, the shares accumulated 0.5 points or 0.82 percent at $61.16 with a heavy trade volume of 1.887 million shares. After opening the session at $60.76, the shares went as high as $61.395 and as low as $60.64, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $17 billion and now has 278.54 million shares outstanding. Cadence Design Systems, Inc. (CDNS) stock has gained 17.32 percent of market value in 21 trading days.

CDNS stock has a trailing 3-year beta of 1.09, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.23 a share in the trailing twelve months. The stock’s value has surged 40.66 percent year to date (YTD) against a rise of 56.14 percent in 12 month’s time. The company’s shares still trade -0.44 percent away from its 1-year high of $61.43 and 72.33 percent up from 52-week low of $35.49. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Cadence Design Systems, Inc. (CDNS) will probably climb -3.52 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $65-month high price target. This represents a whopping 6.28 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $62, which represents a return potential of 1.37 percent when compared to the closing price of the stock of $61.16 on Thursday, March 14. The lowest price target for the stock is $46 — slightly more than -24.79 percent from CDNS’s current share price.

History has shown that shares in Cadence Design Systems, Inc. have gone up on 22 different earnings reaction days and are predicted to add 0.04 percent when the company reports upcoming earnings. Investors will get their next glimpse of CDNS’s Q1 earnings on April 22. Analysts are forecasting revenue to climb 10 percent to $569M in the fiscal first quarter, while earnings are seen soaring by nearly 22.5 percent to $0.49 per share. It earned $0.52 per share, better than the $0.47, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $570M, better than the $550M analysts expected. Earnings are estimated to increase by 219.6 percent this year, 9.03 percent next year and continue to increase by 12 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $60.74. Below this, the next support is placed in the zone of $60.31. Till the time, the CDNS stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 90.06 on daily chart, which may remain a cause for concern. If the price breaks below $60.31 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $61.49 mark may result into a pull-back move towards $61.82 level.

Shares of Cadence Design Systems, Inc. (CDNS) are trading at a P/E ratio of 49.52 times earnings reported for the past 12 months. The industry CDNS operates in has an average P/E of 30.6. Its P/E ratio went as low as 25.75X and as high as 109.11 over the 5-year span.Further, it is sporting a 7.97 on the Price-to-Sales ratio. Compare this with the industry average P/S of 9372.17. 87.9 percent is the gross profit margin for Cadence Design Systems, Inc. and operating margin sits at 18.5 percent. Along with this, the net profit margin is 16.2 percent.