Banking

Cadence Design Systems Beats First-Quarter Goals But Outlook Light

Electronic design software maker Cadence Design Systems (CDNS) late Monday beat Wall Street’s targets for the first quarter but its guidance for the second quarter disappointed. CDNS stock fell in extended trading.




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The San Jose, Calif.-based company earned an adjusted 83 cents a share on sales of $736 million in the March quarter. Analysts had predicted Cadence earnings of 75 cents a share on sales of $717.8 million. On a year-over-year basis, Cadence earnings rose 38% while sales climbed 19%.

“We exceeded all of our key operating metrics for the quarter,” Chief Financial Officer John Wall said in a news release. “We are raising our outlook for revenue, non-GAAP operating margin and non-GAAP earnings for the year while we continue to invest in our expanding multiphysics platform.”

For the second quarter, Cadence expects to earn an adjusted 76 cents a share on revenue of $715 million. That’s based on the midpoint of its outlook. Wall Street had predicted earnings of 76 cents a share on sales of $722.7 million in the June quarter. In the year-earlier period, Cadence earned an adjusted 66 cents a share on sales of $638.4 million.

CDNS Stock Falls After Hours

For the full year, Cadence expects to earn an adjusted $3.03 a share on sales of $2.91 billion, based on the midpoint of its guidance. Analysts had expected 2021 earnings of $3.01 a share on sales of $2.9 billion. In 2020, Cadence earned $2.80 a share on sales of $2.68 billion.

In after-hours trading on the stock market today, CDNS stock slid 3.6%, near 139. During the regular session Monday, CDNS stock rose 1.5% to 144.23.

CDNS stock has been consolidating for the past 10 weeks at a buy point of 149.18, according to IBD MarketSmith charts. It notched a record high of 149.08 on Feb. 16 before the tech stock sell-off.

CDNS stock ranks second out of 11 stocks in IBD’s Computer Software-Design industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 87 out of 99. IBD’s Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths. The best growth stocks have a Composite Rating of 90 or better.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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