Investing in stocks is like surfing. You need to keep riding the wave and stay on course while the tides change. One such impressive stock that has been riding the crest of the financial wave is Cadence Design Systems, Inc. (CDNS), which has witnessed a staggering 50.7% surge in the past year, surpassing the S&P 500 Composite’s growth of 25.4%.
If you are sick and tired of missing out on financial opportunities. Investors may have been skeptical about the sustained growth of this company, however, a closer look will tell you a different story.
Strong Quarterly Results
Despite market uncertainties, Cadence recently announced exceptional fourth-quarter 2023 results with non-GAAP earnings of $1.38 per share, marking an impressive 43.8% year-over-year increase. Additionally, the company reported a revenue surge of 18.8% to $1.069 billion – a testament to its unwavering potential and client demand. CDNS ended the quarter with a backlog of $6 billion and current remaining performance obligations of $3.2 billion.
Moving with the tides, Cadence has been sharpening its competitive edge, navigating through the market tides and making 2023 a phenomenal year. It delivered a 15% increase in revenues, reaching $4.09 billion, and a remarkable 20% boost in earnings to $5.15 per share.
Robust Outlook
The company’s optimistic forecast projects 2024 revenues to range between $4.55 billion and $4.61 billion. Non-GAAP earnings per share (EPS) are anticipated to be between $5.87 and $5.97, with a projected non-GAAP operating margin of 42-43%. Additionally, they are expected to generate operating cash flow between $1.35 billion and $1.45 billion, intending to allocate 50% of the free cash flow to share repurchases in 2024.
A Look at Estimates
Market analysts expect Cadence’s EPS for 2024 and 2025 to escalate by 14% and 17.6%, respectively. Furthermore, the Zacks Consensus Estimate for 2024 and 2025 earnings has seen an uptick, indicating a favorable long-term earnings growth rate of 17.1%. Revenues for 2024 and 2025 are also anticipated to rise by 12.3% and 12.1%, amounting to $4.59 billion and $5.15 billion.
Few Headwinds
Despite its impressive prospects, the company has not been immune to challenges. Management’s guidance for the first quarter of 2024 is marginally lower than the reported actuals in the prior-year quarter.
It’s essential to approach these stocks with a panoramic view, considering potential headwinds such as higher costs, competitive pressures, and demanding global macroeconomic conditions.
Other Stocks to Consider
For those who like to turn the stones to find hidden treasures, other top-ranked stocks worth considering in the broader technology space are Manhattan Associates, Inc. (MANH), Watts Water Technologies, Inc. (WTS), and Microsoft Corporation (MSFT). Each of these companies has its own unique tale to tell amidst the dynamic ebb and flow of the financial markets.
Each of these stocks reflects the charm and promise of the financial markets, showcasing its resilience, consistency, and promising growth prospects.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
