NEW YORK (TheStreet) -- Cadence Design Systems (CDNS) shares are flat in aftermarket trading following the release of the company's first quarter earnings report, despite beating analysts estimates for the quarter.
The company reported first quarter revenue of $379 million, a 7% year over year quarterly increase from the $354 million it posted last year. The company also posted net income of $59 million, or 20 cents per diluted share, slightly down from 2013's first quarter total of $61 million, or 21 cents per diluted share
Analysts estimated revenue of $376.8 million and an EPS of 19 cents for the quarter.
The electric design automation software developer also announced that it had reached a deal to acquire Jasper Design Automation for $170 million in cash.
Must Read: Warren Buffett's 10 Favorite Stocks
TheStreet Ratings team rates CADENCE DESIGN SYSTEMS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:"We rate CADENCE DESIGN SYSTEMS INC (CDNS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 11.6%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $119.16 million or 24.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.31%.
- Although CDNS's debt-to-equity ratio of 0.28 is very low, it is currently higher than that of the industry average. Despite the fact that CDNS's debt-to-equity ratio is low, the quick ratio, which is currently 0.65, displays a potential problem in covering short-term cash needs.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: CDNS Ratings Report
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV