Cadence Design Systems shares jumped Wednesday after the maker of electronic design software beat Wall Street's targets for the fourth quarter and guided much higher for the year ahead. CDNS stock advanced about 4% on the news.
The San Jose, Calif.-based company late Tuesday said it earned an adjusted 82 cents a share on sales of $773 million in the December quarter. Analysts had expected Cadence earnings of 78 cents a share on sales of $757 million, according to FactSet. On a year-over-year basis, Cadence earnings dipped 1% while sales grew 2%.
For the current quarter, Cadence forecast adjusted earnings of $1.02 a share on sales of $860 million. That's based on the midpoint of its outlook. Wall Street had predicted earnings of 82 cents a share on sales of $771 million. Its guidance would translate to growth of 23% in earnings and 17% in sales.
For the full year, Cadence predicted adjusted earnings of $3.75 a share on sales of $3.35 billion. Analysts had been expecting earnings of $3.58 a share on sales of $3.23 billion. The company's full-year outlook would translate to year-over-year growth of 14% in earnings and 12% in sales.
Cadence Stock Pops Higher
On the stock market today, CDNS stock jumped 4.2% to close at 140.88. During the regular session Tuesday, CDNS stock rose 0.2% to 135.21.
"Cadence delivered exceptional business results for 2021," Chief Executive Anirudh Devgan said in a news release. "With generational industry trends continuing to drive robust design activity at both semiconductor and system companies, I excitedly look forward to Cadence driving further customer and shareholder success this year."
Cadence makes software for electronic systems design. Its offerings help customers create products from chips to boards to complete systems in markets such as computing, communications, automotive, aerospace, industrial and health care.
CDNS Stock Is A Long-Term Leader
On Feb. 16, industry peer Synopsys reported roughly in-line results for its fiscal first quarter and guided higher for the year ahead. The Mountain View, Calif.-based company said its sales rose 31% year over year to $1.27 billion in the quarter ended Jan. 31. Its adjusted earnings per share jumped 58% to $2.40.
CDNS stock and Synopsys stock are in the IBD Long-Term Leaders Portfolio.
The IBD Stock Checkup tool ranks CDNS stock as fourth out of 12 stocks in IBD's Computer Software-Design industry group. It has a middling IBD Composite Rating of 59 out of 99. Meanwhile, Synopsys ranks first place in the group with a Composite Rating of 81. However, the software design group ranks a lowly No. 185 out of 197 industry groups that IBD tracks.
IBD trading guidelines recommend focusing on top-rated stocks in leading industry groups.
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