On September 18, 2023, Sr. Vice President Chin-chi Teng sold 7,500 shares of Cadence Design Systems Inc (CDNS, Financial). This move comes amidst a year where the insider has sold a total of 20,358 shares and purchased none.
Chin-chi Teng is a senior executive at Cadence Design Systems Inc, a company that provides software, hardware, services, and reusable integrated circuit design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its software, hardware, and semiconductor IP enable customers to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems.
The insider's recent sell has raised eyebrows in the financial community, prompting a closer look at the company's stock performance and insider trading trends.
The insider transaction history for Cadence Design Systems Inc shows a trend of more sells than buys over the past year. There have been 60 insider sells and 0 insider buys in total. This could indicate that insiders believe the company's stock is currently overvalued, prompting them to sell their shares.
On the day of the insider's recent sell, shares of Cadence Design Systems Inc were trading for $234.53 apiece. This gives the stock a market cap of $64.29 billion.
The price-earnings ratio is 72.56, which is higher than the industry median of 27.27 and higher than the company’s historical median price-earnings ratio. This suggests that the stock is currently overpriced compared to its earnings.
With a price of $234.53 and a GuruFocus Value of $208.76, Cadence Design Systems Inc has a price-to-GF-Value ratio of 1.12. This means the stock is modestly overvalued based on its GF Value.
The GF Value is an intrinsic value estimate developed by GuruFocus. It is calculated based on historical multiples (price-earnings ratio, price-sales ratio, price-book ratio, and price-to-free cash flow) that the stock has traded at, a GuruFocus adjustment factor based on the company’s past returns and growth, and future estimates of business performance from Morningstar analysts.
In conclusion, the recent sell by the insider, coupled with the company's high price-earnings ratio and modest overvaluation based on its GF Value, suggests that the stock may be overpriced. Investors should exercise caution and conduct further research before making investment decisions.
