Synopsys Earnings Preview

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Investors braced for a bumpy ride ahead of Synopsys' (NAS: SNPS) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Wednesday, August 17. Synopsys is engaged in the electronic design automation software and related services for semiconductor design companies.

What analysts say:

  • Buy, sell, or hold?: Analysts are very bullish on this stock, unanimously backing it as a buy. Analysts like Synopsys better than competitor Cadence Design Systems overall. Five out of seven analysts rate Cadence Design Systems a buy compared to seven of seven for Synopsys. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $382.4 million in revenue this quarter. That would represent a rise of 13.5% from the year-ago quarter.

What our community says:
CAPS All Stars are solidly behind the stock, with 84.6% assigning it an "outperform" rating. The community at large agrees with the All Stars, with 76.5% giving it a rating of "outperform." Fools have embraced Synopsys, though the message boards have been quiet lately with only 35 posts in the past 30 days. Synopsys' bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Synopsys' profit has risen year over year by an average of 13.6% over the past five quarters. Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters:

Quarter

Q2

Q1

Q4

Q3

Gross Margin

78.1%

76.9%

78.8%

80.2%

Operating Margin

13.1%

12.8%

8.9%

15.1%

Net Margin

20.6%

13.2%

6.8%

11.7%

One final thing: If you want to keep tabs on Synopsys movements, and for more analysis on the company, make sure you add it to your Watchlist.

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At the time this article was published

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