Earnings Previews: Cadence Design, Discover Financial, Range Resources

The three major U.S. equity indexes closed lower on Thursday, following a choppy trading session that turned gains into losses by noon. The Dow Jones industrials ended the day down 0.3%, the S&P 500 closed 0.8% lower, and the Nasdaq dipped by 0.61%. Eight of 11 sectors closed lower, with utilities (2.51%) and industrials (1.91%) posting the biggest losses. The only gains were seen in communications services (0.36%), energy (0.18%) and tech (0.07%).

The weekly report on new claims for jobless benefits came in below expectations Thursday morning, and below the prior week’s total. Existing home sales were lower month over month in September, and that probably led to the downturn in share prices in the late morning.

All three major indexes opened lower in Friday’s regular session.

After markets closed Thursday, CSX reported better-than-expected adjusted earnings per share (EPS) and revenues. The stock traded up about 3.5% Friday morning.

Snap beat EPS estimates but missed slightly on revenue. A weak outlook for the current quarter was sinking the shares Friday morning. The stock traded down about 27%.

Before markets opened on Friday, Verizon beat both top-line and bottom-line estimates. Verizon missed estimates for new subscriptions and shares were punished, down more than 5% in the first few minutes of trading on Friday.

American Express beat the consensus EPS estimate but missed the revenue estimate by about $25 million. Even though revenue was up 24% year over year, investors did not see enough. Shares traded down about 5.5%.

Schlumberger beat estimates on both the top and bottom lines. Shares traded up about 4.3% in early trading Friday.

No notable earnings reports are due out Friday afternoon or before early Monday. Here is a look at three companies scheduled to report quarterly results after U.S. markets close on Monday.

Cadence Design

Shares of Cadence Design Systems Inc. (NASDAQ: CDNS) reached a 52-week high in mid-August after posting its 52-week low just three months earlier. Cadence struck new deals with chip makers and designers like Samsung, Google and GlobalFoundries during the September quarter. Investors’ enthusiasm for the stock appears to depend on quarterly results. when Cadence beats estimates or offers upbeat guidance, the share price rises. And vice versa.

As a group, analysts are moderately bullish. Of 14 brokerages covering the stock, have a Buy or Strong Buy rating and the other five rate shares at Hold. At a recent price of around $153.00 a share, the stock’s upside potential based on a median price target of $196.00 is 27.1%. At the high price target of $215.00, the upside potential is 40.5%.

For the third quarter, Cadence is expected to report revenue of $868.85 million, which would be up about 1.3% sequentially and by 15.7% year over year. Adjusted EPS are forecast at $0.96, down 11% sequentially but 20% higher year over year. For the full 2022 fiscal year, analysts are looking for EPS of $4.11, up 25.1%, and revenue of $3.49 billion, up almost 17%.

Cadence stock trades at about 37.2 times expected 2022 EPS, 33.2 times estimated 2023 earnings of $4.62 and 29.0 times estimated 2024 earnings of $5.28 per share. The stock’s 52-week trading range is $132.31 to $194.97, and the company does not pay a dividend. Total shareholder return for the past 12 months was negative 4.4%.

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