Here's Why Synopsys (SNPS) Fell More Than Broader Market

In the latest close session, Synopsys (SNPS) was down 2.65% at $373.65. The stock's change was less than the S&P 500's daily loss of 1.52%. Elsewhere, the Dow lost 2.19%, while the tech-heavy Nasdaq lost 1.74%.

Shares of the maker of software used to test and develop chips have depreciated by 13.96% over the course of the past month, underperforming the Computer and Technology sector's loss of 3.5%, and the S&P 500's gain of 1.92%.

The upcoming earnings release of Synopsys will be of great interest to investors. The company's earnings report is expected on August 26, 2026. The company is forecasted to report an EPS of $3.68, showcasing a 8.55% upward movement from the corresponding quarter of the prior year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.44 billion, up 40.31% from the year-ago period.

For the annual period, the Zacks Consensus Estimates anticipate earnings of $14.75 per share and a revenue of $9.69 billion, signifying shifts of +14.25% and +37.37%, respectively, from the last year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Synopsys. Recent revisions tend to reflect the latest near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. At present, Synopsys boasts a Zacks Rank of #2 (Buy).

In terms of valuation, Synopsys is currently trading at a Forward P/E ratio of 26.02. Its industry sports an average Forward P/E of 15.92, so one might conclude that Synopsys is trading at a premium comparatively.

It's also important to note that SNPS currently trades at a PEG ratio of 1.63. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. As of the close of trade yesterday, the Computer - Software industry held an average PEG ratio of 1.31.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 89, putting it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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