NEW YORK ( TheStreet) -- Cadence Design Systems (Nasdaq: CDNS) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally poor debt management on most measures that we evaluated. Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 0.2%. Since the same quarter one year prior, revenues rose by 23.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 129.4% when compared to the same quarter one year prior, rising from -$37.04 million to $10.89 million.
- Net operating cash flow has slightly increased to $62.14 million or 8.98% when compared to the same quarter last year. Despite an increase in cash flow, CADENCE DESIGN SYSTEMS INC's cash flow growth rate is still lower than the industry average growth rate of 24.12%.
- CADENCE DESIGN SYSTEMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CADENCE DESIGN SYSTEMS INC reported lower earnings of $0.26 versus $0.49 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.26).