Synopsys (SNPS) Laps the Stock Market: Here's Why

Core Viewpoint - Synopsys is expected to report strong earnings and revenue growth in the upcoming earnings release, with positive analyst sentiment reflected in the estimates [2][3][4]. Company Performance - Synopsys closed at $616.01, with a daily gain of +0.32%, outperforming the S&P 500's gain of 0.28% [1]. - Over the past month, Synopsys shares appreciated by 4.04%, underperforming the Computer and Technology sector's gain of 4.22% but outperforming the S&P 500's gain of 3.78% [1]. Earnings Forecast - The forecasted EPS for Synopsys is $3.26, representing a 13.19% increase from the same quarter last year [2]. - Revenue is expected to be $1.53 billion, showing a 2.55% increase compared to the year-ago quarter [2]. - For the entire fiscal year, earnings are projected at $13.03 per share and revenue at $6.19 billion, reflecting increases of +16.44% and +5.91% respectively from the prior year [3]. Analyst Estimates - Changes in analyst estimates are crucial as they reflect short-term business trends, with upward revisions indicating positive sentiment towards the company's operations [4]. - The Zacks Rank system, which assesses these estimate changes, currently ranks Synopsys at 3 (Hold) [6]. Valuation Metrics - Synopsys has a Forward P/E ratio of 47.12, which is higher than the industry average of 30.81, indicating it is trading at a premium [7]. - The PEG ratio for Synopsys is currently 2.94, compared to the industry average PEG ratio of 2.49 [8]. Industry Context - The Computer - Software industry, which includes Synopsys, has a Zacks Industry Rank of 102, placing it in the top 41% of all industries [9].