Cadence Design Systems Return on Capital Employed Review


According to Benzinga Pro, during the first trimester, Cadence Design Systems CDN earned $235.34 million, an increase of 33.27% over the previous quarter. Cadence Design Systems also recorded total revenue of $901.77 million, an increase of 16.65% since the fourth quarter. In the fourth quarter, Cadence Design Systems earned $176.58 million and total sales reached $773.04 million.

Why is ROCE important?

Profit data without context is unclear and can be difficult to base trading decisions on. Return on Capital Employed (ROCE) helps filter out the signal from the noise by measuring annual pre-tax profit against the capital employed by a company. Generally, a higher ROCE suggests successful growth of a business and is a sign of higher earnings per share in the future. In the first quarter, Cadence Design Systems posted a ROCE of 0.09%.

It is important to keep in mind that ROCE assesses past performance and is not used as a predictive tool. It’s a good measure of a company’s recent performance, but it doesn’t take into account factors that may affect profits and sales in the near future.

ROCE is a powerful metric for comparing the efficiency of capital allocation for similar companies. A relatively high ROCE shows that Cadence Design Systems is potentially operating at a higher level of efficiency than other companies in its industry. If the company is generating high profits with its current level of capital, some of that money can be reinvested in more capital, which will generally lead to higher returns and ultimately growth in earnings per share ( EPS).

For Cadence Design Systems, the positive return on capital employed ratio of 0.09% suggests that management is allocating its capital efficiently. Efficient capital allocation is a positive indicator that a company will achieve more sustainable success and favorable long-term returns.

Estimated future income

Cadence Design Systems reported first-quarter earnings per share of $1.17/share, beating analysts’ forecast of $1.02/share.

This article was generated by Benzinga’s automated content engine and reviewed by an editor.


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