Benzinga | Feb 19, 2021 10:41AM EST

Earnings Preview: Cadence Design Systems

Cadence Design Systems (NASDAQ:CDNS) announces its next round of earnings this Monday, February 22. Here is Benzinga's everything-that-matters guide for this Monday's Q4 earnings announcement.

What Are Earnings, Net Income, And Earnings Per Share?

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Wall Street expects EPS of $0.74 and sales around $732.01 million. Cadence Design Systems EPS in the same period a year ago totaled $0.54. Revenue was $599.55 million.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

Analysts who cover this company will publish forward-looking estimates of its revenue and EPS each quarter. Averaging together every EPS and revenue prediction that each analyst makes about a company in a quarter yields the "consensus estimates." A company posting earnings or revenue above or below the consensus estimate is known as an "earnings surprise" and may move the stock by a considerable margin.

The analyst consensus estimate would represent a 37.04% increase in the company's EPS figure. Revenue would be up 22.09% from the same quarter last year. Cadence Design Systems's reported EPS has stacked up against analyst estimates in the past like this:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate 0.61 0.52 0.54 0.53EPS Actual 0.70 0.66 0.60 0.54Revenue Estimate 641.47 M 592.79 M 613.41 M 595.42 MRevenue Actual 666.61 M 638.42 M 617.96 M 599.55 M

Stock Performance

Shares of Cadence Design Systems were trading at $139.53 as of February 18. Over the last 52-week period, shares are up 98.19%. Given that these returns are generally positive, long-term shareholders are probably content going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Cadence Design Systems is scheduled to hold the call at 17:00:00 ET and can be accessed here.