Track market-moving stories before they get noisy

Investors might want to bet on Analog Devices (ADI - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this semiconductor maker, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Analog Devices, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate RevisionsThe company is expected to earn $3.19 per share for the current quarter, which represents a year-over-year change of +55.6%.

Over the last 30 days, the Zacks Consensus Estimate for Analog Devices has increased 10.55% because five estimates have moved higher compared to no negative revisions.

Current-Year Estimate RevisionsFor the full year, the company is expected to earn $12.31 per share, representing a year-over-year change of +58.0%.

The revisions trend for the current year also appears quite promising for Analog Devices, with 10 estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 8.49%.

Favorable Zacks RankThanks to promising estimate revisions, Analog Devices currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom LineInvestors have been betting on Analog Devices because of its solid estimate revisions, as evident from the stock's 9.6% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.

Analog Devices, Inc. (ADI) Presents at Bank of America 2026 Global Technology Conference Transcript

United States Representative Josh Gottheimer, a Democrat from New Jersey, just disclosed a wave of fresh stock purchases, and among them, four are direct bets on the Artificial Intelligence (AI) chip industry.

The congressmen purchased Advanced Micro Devices, Inc. (NASDAQ: AMD), Micron Technology, Inc. (NASDAQ: MU), Analog Devices, Inc. (NASDAQ: ADI), and Fabrinet (NYSE: FN), according to a filing with the Clerk of the U.S. House of Representatives on June 3, 2026, and analyzed by Finbold on June 4. The purchases were executed between May 1 and May 21, 2026, in accordance with the Stock Act.

Each of Gottheimer’s four AI chip purchases fell within the same bracket of between $1,001 and $15,000. Gottheimer’s AI chip buys are notable given his seat on the House Financial Services subcommittee overseeing artificial intelligence.

All four companies are core suppliers to the AI boom. Notably, Micro Devices builds the processors that train AI models, and Micron makes the high-bandwidth memory those chips rely on. Meanwhile, Analog Devices supplies the power and signal chips that keep data centers running, while Fabrinet manufactures the optical components that link AI servers.

Market performance of these 4 AI chip stocks Since Gottheimer purchased Micron Technology earlier last month, MU stock has surged over 59%, trading at $1,023.44 at press time. As such, the company had a market capitalization of around $1.2 trillion on Thursday.

MU stock 30-day chart. Source: Finbold Over the past 30 days, Advanced Micro Devices stock has surged by more than 48%, trading at approximately $525.86 at the time of publication. As a result, the company’s market cap climbed to hover above $884.6 billion.

AMD stock 30-day chart. Source: Finbold During the same period, ADI stock has gained 6.13%, trading at $429 at press time. Consequently, Analog Devices had a market valuation of about $213.2 billion.

ADI stock 30-day chart. Source: Finbold Meanwhile, FN stock has added 9.5% over the past 30 days, trading at $723.04 at the time of reporting. The company’s market cap hovered around $26 billion.

FN stock 30-day chart. Source: Finbold Gottheimer could be betting on continued global demand for AI, with these four stocks well positioned to gain traction in the near term.

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Analog Devices ADI shares have climbed 77.4% in a year, outperforming the Zacks Computer and Technology sector's appreciation of 43.5%. The rise in stock price is due to the restoration of investors' confidence in a broad-based recovery in ADI's industrial segment and AI-related data center demand, driving higher utilization and a favorable mix.

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Analog Devices (ADI - Free Report) .

Analog Devices currently has an average brokerage recommendation (ABR) of 1.44, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 32 brokerage firms. An ABR of 1.44 approximates between Strong Buy and Buy.

Of the 32 recommendations that derive the current ABR, 23 are Strong Buy and four are Buy. Strong Buy and Buy respectively account for 71.9% and 12.5% of all recommendations.

Brokerage Recommendation Trends for ADI

Check price target & stock forecast for Analog Devices here>>>

The ABR suggests buying Analog Devices, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

ABR Should Not Be Confused With Zacks RankIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.

In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

Should You Invest in ADI?Looking at the earnings estimate revisions for Analog Devices, the Zacks Consensus Estimate for the current year has increased 9.4% over the past month to $12.41.

Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Analog Devices. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, the Buy-equivalent ABR for Analog Devices may serve as a useful guide for investors.

© Vadi Fuoco / Shutterstock.com

Gabelli Equity Trust (NYSE:GAB) has quietly become one of the most beloved income vehicles among retail investors, and the math behind that loyalty is straightforward: a 9.5% annualized yield paid quarterly, a founder who keeps buying shares with his own money, and a recent rights offering oversubscribed by more than $117 million. The question income investors actually need answered is whether that yield is real money or a slow return of their own capital dressed up as income.

Gabelli Equity Trust is a closed-end management investment company launched in August 1986 with $2.1 billion in net assets. Shares trade around $6, down 7% year to date but up 17% over the past year.

How the Distribution Actually Gets Funded GAB runs a managed minimum distribution policy targeting 10% of average net asset value annually, paid out as $0.15 per share each quarter. That rate has held for 16 consecutive quarters going back to Q1 2022. The fund held quarterly payments steady through the 2008 crisis and the 2020 pandemic, which matters because most CEFs with similar yields have cut at least once in that window.

The funding source is where readers need to pay attention. Unlike an equity ETF that passes through underlying dividends, GAB’s distribution is funded by a combination of portfolio dividend income, realized capital gains, and, when needed, return of capital. The fund uses preferred shares for leverage and holds at least 80% of assets in equities, so the distribution ultimately depends on the total return of a concentrated portfolio of quality compounders.

The Holdings Doing the Heavy Lifting The top of the book reads like a value investor’s wish list: Berkshire Hathaway, AMETEK, American Express, Mastercard, Deere, Curtiss-Wright, Rolls-Royce, O’Reilly Automotive, Republic Services, and Rollins. Sector weights lean into Financial Services at 14%, Equipment and Supplies at 9%, and Food and Beverage at 7%.

The underlying book skews toward low-yielders: Berkshire pays nothing, Mastercard yields under 1%, and O’Reilly returns cash through buybacks rather than dividends. That tells you everything about how GAB generates its 9.5% payout: the fund sells appreciated positions and distributes the gains. When markets cooperate, this works beautifully. When they do not, distributions can come partially from return of capital, which is effectively your own money handed back to you with a tax-efficient wrapper.

Signals Pointing Toward Durability Insider and institutional behavior has been unusually loud. Founder Mario Gabelli purchased 500,000 shares in December 2025 for roughly $5 million, with additional buying in early 2026. Envestnet Asset Management increased its stake by 762%, and J.W. Cole Advisors added 75% to its position. Founders buying $5 million of their own fund is a meaningful signal.

The Counterargument Worth Hearing Critics have grounds. The expense ratio runs 1.6%, steep compared with passive equity funds. A February 2025 Seeking Alpha analysis flagged underperformance versus the S&P 500 over five years and reliance on unrealized gains. With the 10-year Treasury near 4%, the spread GAB offers over risk-free income has narrowed.

The Verdict The $0.15 quarterly payout looks safe based on policy commitment, distribution history through two crises, and the quality of the underlying book. The riskier assumption is that the full 9.5% represents pure income. A portion will be return of capital in flat or down years, which erodes NAV over time. GAB makes sense for retail income investors who understand CEF mechanics and want predictable cash flow from a leveraged value portfolio. It makes less sense for anyone expecting the yield and the principal to both grow untouched.

First quarter comparable store sales growth of 8.1%16% increase in first quarter diluted earnings per share to $0.72$1 billion net cash provided by operating activities year-to-date
SPRINGFIELD, Mo., April 29, 2026 (GLOBE NEWSWIRE) -- O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”) (Nasdaq: ORLY), a leading retailer in the automotive aftermarket industry, today announced record revenue and earnings for its first quarter ended March 31, 2026.

1st Quarter Financial Results

Brad Beckham, O’Reilly’s CEO, commented, “We are pleased to report a strong start to 2026, highlighted by an 8.1% increase in comparable store sales and a 16% increase in our first quarter diluted earnings per share. Team O’Reilly delivered comparable store sales results exceeding our expectations in both professional and DIY, with double-digit growth in our professional business and mid-single digit growth in DIY. Our ability to drive productivity in our business and translate robust sales growth into a 14% increase in operating profit is the direct result of our Team’s focus on prudent expense management. I would like to thank all of our Team Members for their incredible hard work in the first quarter and their relentless focus on providing unsurpassed service to our customers each and every day. We look forward to the opportunities we have to grow our market share in 2026 and are encouraged by the stable demand backdrop in our industry.”

Sales for the first quarter of 2026 increased $424 million, or 10%, to $4.56 billion from $4.14 billion for the same period one year ago. Gross profit for the first quarter of 2026 increased 11% to $2.35 billion (or 51.5% of sales) from $2.12 billion (or 51.3% of sales) for the same period one year ago. Selling, general and administrative expenses for the first quarter of 2026 increased 9% to $1.51 billion (or 33.0% of sales) from $1.38 billion (or 33.4% of sales) for the same period one year ago. Operating income for the first quarter of 2026 increased 14% to $842 million (or 18.5% of sales) from $741 million (or 17.9% of sales) for the same period one year ago.

Net income for the first quarter of 2026 increased $66 million, or 12%, to $604 million (or 13.2% of sales) from $538 million (or 13.0% of sales) for the same period one year ago. Diluted earnings per common share for the first quarter of 2026 increased 16% to $0.72 on 843 million shares versus $0.62 on 864 million shares for the same period one year ago.

1st Quarter Comparable Store Sales Results

Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members. Online sales for ship-to-home orders and pick-up-in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. Comparable store sales increased 8.1% for the first quarter ended March 31, 2026, on top of 3.6% for the same period one year ago.

Share Repurchase Program

During the first quarter ended March 31, 2026, the Company repurchased 10.0 million shares of its common stock, at an average price per share of $92.45, for a total investment of $923 million. Excise tax on shares repurchased, assessed at one percent of the fair market value of shares repurchased, was $9.2 million for the three months ended March 31, 2026. Subsequent to the end of the first quarter and through the date of this release, the Company repurchased an additional 3.6 million shares of its common stock, at an average price per share of $92.83, for a total investment of $338 million. The Company has repurchased a total of 1.48 billion shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through the date of this release, at an average price of $19.38, for a total aggregate investment of $28.61 billion. As of the date of this release, the Company had approximately $1.14 billion remaining under its current share repurchase authorization.

Updated Full-Year 2026 Guidance

The table below outlines the Company’s updated guidance for selected full-year 2026 financial data:

     For the Year Ending  December 31, 2026Net, new store openings 225 to 235Comparable store sales 3.0% to 5.0%Total revenue $18.7 billion to $19.0 billionGross profit as a percentage of sales 51.5% to 52.0%Operating income as a percentage of sales 19.3% to 19.8%Effective income tax rate 22.6%
Diluted earnings per share(1) $3.15 to $3.25Net cash provided by operating activities $3.1 billion to $3.5 billionCapital expenditures $1.3 billion to $1.4 billionFree cash flow(2) $1.8 billion to $2.1 billion (1)Weighted-average shares outstanding, assuming dilution, used in the denominator of this calculation, includes share repurchases made by the Company through the date of this release.(2)Free cash flow is a non-GAAP financial measure. The table below reconciles Free cash flow guidance to Net cash provided by operating activities guidance, the most directly comparable GAAP financial measure:               For the Year Ending (in millions) December 31, 2026 Net cash provided by operating activities $3,110 to $3,520 Less:Capital expenditures  1,300 to  1,400  Excess tax benefit from share-based compensation payments  10 to  20 Free cash flow $1,800 to $2,100           Non-GAAP Information

This release contains certain financial information not derived in accordance with United States generally accepted accounting principles (“GAAP”). These items include adjusted debt to earnings before interest, taxes, depreciation, amortization, share-based compensation, and rent (“EBITDAR”) and free cash flow. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The Company believes that the presentation of adjusted debt to EBITDAR and free cash flow provide meaningful supplemental information to both management and investors that is indicative of the Company’s core operations. The Company has included a reconciliation of this additional information to the most comparable GAAP measure in the table above and the selected financial information below.

Earnings Conference Call Information

The Company will host a conference call on Thursday, April 30, 2026, at 10:00 a.m. Central Time to discuss its results as well as future expectations. Investors may listen to the conference call live on the Company’s website at www.OReillyAuto.com by clicking on “Investor Relations.” Interested analysts are invited to join the call. The dial-in number for the call is (888) 506-0062 and the conference call identification number is 264620. A replay of the conference call will be available on the Company’s website through Thursday, April 29, 2027.

About O’Reilly Automotive, Inc.

O’Reilly Automotive, Inc. was founded in 1957 by the O’Reilly family and is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, serving both the do-it-yourself and professional service provider markets. Visit the Company’s website at www.OReillyAuto.com for additional information about O’Reilly, including access to online shopping and current promotions, store locations, hours and services, employment opportunities, and other programs. As of March 31, 2026, the Company operated 6,644 stores across 48 U.S. states, Puerto Rico, Mexico, and Canada.

Forward-Looking Statements

The Company claims the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as “estimate,” “may,” “could,” “will,” “believe,” “expect,” “would,” “consider,” “should,” “anticipate,” “project,” “plan,” “intend,” “guidance,” “target,” or similar words. In addition, statements contained within this press release that are not historical facts are forward-looking statements, such as statements discussing, among other things, expected growth, store development, integration and expansion strategy, business strategies, future revenues, and future performance. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties, and assumptions, including, but not limited to, the economy in general; inflation; consumer debt levels; product demand; a public health crisis; the market for auto parts; competition; weather; trade disputes and changes in trade policies, including the imposition of new or increased tariffs; availability of key products and supply chain disruptions; business interruptions, including terrorist activities, war and the threat of war; failure to protect our brand and reputation; challenges in international markets; volatility of the market price of our common stock; our increased debt levels; credit ratings on public debt; damage, failure, or interruption of information technology systems, including information security and cyber-attacks; historical growth rate sustainability; our ability to hire and retain qualified employees; risks associated with the performance of acquired businesses; and governmental regulations. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the “Risk Factors” section of the annual report on Form 10-K for the year ended December 31, 2025, and subsequent Securities and Exchange Commission filings, for additional factors that could materially affect the Company’s financial performance. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

  For further information contact:Investor Relations Contacts Leslie Skorick (417) 874-7142 Eric Bird (417) 868-4259   Media Contact Sonya Cox (417) 427-8071    O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)            March 31, 2026 March 31, 2025 December 31, 2025  (Unaudited) (Unaudited) (Note)Assets         Current assets:         Cash and cash equivalents $252,632  $191,248  $193,793 Accounts receivable, net  431,173   392,168   389,793 Amounts receivable from suppliers  165,033   129,921   159,900 Inventory  5,810,121   5,172,436   5,731,385 Other current assets  308,377   143,694   269,406 Total current assets  6,967,336   6,029,467   6,744,277           Property and equipment, at cost  10,440,524   9,450,387   10,222,249 Less: accumulated depreciation and amortization  4,065,527   3,684,666   3,964,824 Net property and equipment  6,374,997   5,765,721   6,257,425           Operating lease, right-of-use assets  2,450,393   2,374,177   2,391,150 Goodwill  953,035   933,130   948,208 Other assets, net  191,417   191,380   197,193 Total assets $16,937,178  $15,293,875  $16,538,253           Liabilities and shareholders’ deficit         Current liabilities:         Accounts payable $7,237,126  $6,535,532  $7,103,684 Self-insurance reserves  321,896   154,013   297,304 Accrued payroll  152,357   132,965   119,603 Accrued benefits and withholdings  256,015   214,547   240,072 Income taxes payable  6,996   137,142   13,957 Current portion of operating lease liabilities  445,416   425,330   439,907 Other current liabilities  804,462   910,977   561,294 Total current liabilities  9,224,268   8,510,506   8,775,821           Long-term debt  6,195,311   5,651,821   6,016,904 Operating lease liabilities, less current portion  2,090,498   2,026,668   2,034,688 Deferred income taxes  224,411   236,572   211,210 Other liabilities  269,745   225,764   262,982           Shareholders’ equity (deficit):         Common stock, $0.01 par value:         Authorized shares – 1,250,000,000         Issued and outstanding shares –         832,292,716 as of March 31, 2026,         856,702,725 as of March 31, 2025, and         841,909,238 as of December 31, 2025  8,323   8,567   8,419 Additional paid-in capital  1,537,430   1,476,741   1,530,292 Retained deficit  (2,638,068)  (2,805,929)  (2,328,817)Accumulated other comprehensive income (loss)  25,260   (36,835)  26,754 Total shareholders’ deficit  (1,067,055)  (1,357,456)  (763,352)          Total liabilities and shareholders’ deficit $16,937,178  $15,293,875  $16,538,253               Note: The balance sheet at December 31, 2025, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

 O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)         For the Three Months Ended  March 31,  2026  2025 Sales $4,560,539  $4,136,924 Cost of goods sold, including warehouse and distribution expenses  2,213,328   2,015,439 Gross profit  2,347,211   2,121,485        Selling, general and administrative expenses  1,505,603   1,380,019 Operating income  841,608   741,466        Other income (expense):      Interest expense  (62,745)  (57,564)Interest income  1,748   1,664 Other, net  (522)  (1,215)Total other expense  (61,519)  (57,115)       Income before income taxes  780,089   684,351 Provision for income taxes  175,908   145,866 Net income $604,181  $538,485        Earnings per share-basic:      Earnings per share $0.72  $0.63 Weighted-average common shares outstanding – basic  838,578   859,564        Earnings per share-assuming dilution:      Earnings per share $0.72  $0.62 Weighted-average common shares outstanding – assuming dilution  842,516   864,331            O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)         For the Three Months Ended  March 31,  2026  2025 Operating activities:      Net income $604,181  $538,485 Adjustments to reconcile net income to net cash provided by operating activities:      Depreciation and amortization of property, equipment and intangibles  135,361   122,224 Amortization of debt discount and issuance costs  1,887   1,851 Deferred income taxes  13,291   (11,159)Share-based compensation programs  8,816   8,444 Other  1,987   3,191 Changes in operating assets and liabilities:      Accounts receivable  (45,716)  (37,758)Inventory  (79,069)  (75,081)Accounts payable  135,531   9,952 Income taxes payable  951   138,513 Other  255,693   56,458 Net cash provided by operating activities  1,032,913   755,120        Investing activities:      Purchases of property and equipment  (244,447)  (286,951)Proceeds from sale of property and equipment  1,542   1,948 Other, including acquisitions, net of cash acquired  (1,751)  — Net cash used in investing activities  (244,656)  (285,003)       Financing activities:      Net (payments) proceeds of commercial paper  (163,887)  129,288 Proceeds from the issuance of long-term debt  847,365   — Principal payments on long-term debt  (500,000)  — Payment of debt issuance costs  (5,909)  (3,801)Repurchases of common stock  (922,947)  (559,432)Net proceeds from issuance of common stock  16,609   24,926 Other  (270)  (433)Net cash used in financing activities  (729,039)  (409,452)       Effect of exchange rate changes on cash  (379)  338 Net increase in cash and cash equivalents  58,839   61,003 Cash and cash equivalents at beginning of the period  193,793   130,245 Cash and cash equivalents at end of the period $252,632  $191,248        Supplemental disclosures of cash flow information:      Income taxes paid $18,909  $16,904 Interest paid, net of capitalized interest  43,544   39,424            O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)          For the Twelve Months Ended  March 31,Adjusted Debt to EBITDAR: 2026 2025(In thousands, except adjusted debt to EBITDAR ratio)      GAAP debt $6,195,311 $5,651,821Add:Letters of credit  197,892  127,264 Unamortized discount and debt issuance costs  29,689  27,679 Six-times rent expense  2,986,494  2,771,640Adjusted debt $9,409,386 $8,578,404       GAAP net income $2,603,905 $2,377,927Add:Interest expense  240,245  222,964 Provision for income taxes  732,004  651,098 Depreciation and amortization  524,367  474,468 Share-based compensation expense  35,487  30,353 Rent expense(i)  497,749  461,940EBITDAR $4,633,757 $4,218,750       Adjusted debt to EBITDAR  2.03  2.03 (i)The table below outlines the calculation of Rent expense and reconciles Rent expense to Total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the twelve months ended March 31, 2026 and 2025 (in thousands):             For the Twelve Months Ended   March 31,   2026 2025 Total lease cost, per ASC 842 $598,987 $558,415 Less:Variable non-contract operating lease components, related to property taxes and insurance  101,238  96,475 Rent expense $497,749 $461,940                    March 31,  2026 2025Selected Balance Sheet Ratios:        Inventory turnover(1)  1.6  1.6Average inventory per store (in thousands)(2) $874 $806Accounts payable to inventory(3)  124.6%  126.4%                     For the Three Months Ended   March 31,   2026 2025Reconciliation of Free Cash Flow (in thousands):      Net cash provided by operating activities $1,032,913 $755,120Less:Capital expenditures  244,447  286,951 Excess tax benefit from share-based compensation payments  3,352  12,925Free cash flow $785,114 $455,244                 For the Three Months Ended  March 31,  2026 2025Revenue Disaggregation (in thousands):     Sales to do-it-yourself customers$2,190,132 $2,051,859Sales to professional service provider customers  2,290,784  1,998,593Other sales and sales adjustments  79,623  86,472Total sales $4,560,539 $4,136,924                   For the Three Months Ended For the Twelve Months Ended  March 31, March 31,  2026 2025  2026 2025 Store Count:        Beginning domestic store count 6,447 6,265  6,298 6,131 New stores opened 48 33  197 167 Stores closed — —  — — Ending domestic store count 6,495 6,298  6,495 6,298          Beginning Mexico store count 112 87  93 63 New stores opened 9 6  28 30 Stores closed — —  — — Ending Mexico store count 121 93  121 93          Beginning Canada store count 26 26  25 23 New stores opened 2 —  3 3 Stores closed — (1) — (1)Ending Canada store count 28 25  28 25          Total ending store count 6,644 6,416  6,644 6,416                            For the Three Months Ended For the Twelve Months Ended  March 31, March 31,  2026 2025 2026 2025Store and Team Member Information:            Total employment  93,973  93,419      Square footage (in thousands)(4)  52,229  49,371      Sales per weighted-average square foot(4)(5) $85.94 $82.22 $349.36 $341.85Sales per weighted-average store (in thousands)(4)(6) $688 $643 $2,774 $2,650              (1)Calculated as cost of goods sold for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.(2)Calculated as inventory divided by store count at the end of the reported period.(3)Calculated as accounts payable divided by inventory.(4)Represents O’Reilly’s U.S. and Puerto Rico operations only.(5)Calculated as sales less jobber sales, divided by weighted-average square footage. Weighted-average square footage is determined by weighting store square footage based on the approximate dates of store openings, acquisitions, expansions, or closures.(6)Calculated as sales less jobber sales, divided by weighted-average stores. Weighted-average stores is determined by weighting stores based on their approximate dates of openings, acquisitions, or closures.

O'Reilly Automotive (ORLY - Free Report) came out with quarterly earnings of $0.72 per share, beating the Zacks Consensus Estimate of $0.69 per share. This compares to earnings of $0.62 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of +4.18%. A quarter ago, it was expected that this auto parts retailer would post earnings of $0.72 per share when it actually produced earnings of $0.71, delivering a surprise of -1.39%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

O'Reilly Automotive, which belongs to the Zacks Automotive - Retail and Wholesale - Parts industry, posted revenues of $4.56 billion for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 2.10%. This compares to year-ago revenues of $4.14 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

O'Reilly Automotive shares have added about 0.4% since the beginning of the year versus the S&P 500's gain of 4.3%.

What's Next for O'Reilly Automotive?While O'Reilly Automotive has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for O'Reilly Automotive was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.94 on $4.83 billion in revenues for the coming quarter and $3.23 on $18.93 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Retail and Wholesale - Parts is currently in the bottom 19% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, Advance Auto Parts (AAP - Free Report) , is yet to report results for the quarter ended March 2026.

This auto parts retailer is expected to post quarterly earnings of $0.40 per share in its upcoming report, which represents a year-over-year change of +281.8%. The consensus EPS estimate for the quarter has been revised 1.1% lower over the last 30 days to the current level.

Advance Auto Parts' revenues are expected to be $2.56 billion, down 0.7% from the year-ago quarter.

Key Takeaways ORLY beat Q1 EPS and revenue estimates, with earnings and sales rising year over year.Strong demand drove 8.1% comp sales growth across professional and DIY segments.Margins improved as cost control and higher sales boosted profit and cash flow. O’Reilly Automotive, Inc. (ORLY - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) of 72 cents, which beat the Zacks Consensus Estimate of 69 cents by 4.18%. The bottom line increased from 62 cents in the prior-year quarter.

The automotive parts retailer registered quarterly revenues of $4.56 billion, which surpassed the Zacks Consensus Estimate of $4.47 billion by 2.1%. The top line also rose 10.2% year over year.

The quarter was driven by strong demand, with comparable store sales rising 8.1%. Growth in both the professional and DIY segments, along with careful cost control, supported the overall performance. The company opened 59 stores in the United States, Mexico and Canada in the first quarter. The total store count was 6,644 as of March 31, 2026.

ORLY’s Sales Mix Highlights Professional MomentumA key feature of the quarter was the continued weight of the professional service provider channel. Sales to professional customers were $2.29 billion, up from $2 billion a year ago, reflecting meaningful growth in the company’s higher-frequency commercial business.

Do-it-yourself demand also contributed, with DIY sales of $2.19 billion versus $2.05 billion in the prior-year quarter. Other sales and adjustments were $79.6 million compared with $86.5 million last year, leaving the mix largely driven by the two core customer groups.

O’Reilly Expands Profit Dollars as Sales ScaleO’Reilly translated the higher sales base into improved profit dollars. Gross profit increased to $2.35 billion, and gross margin held firm at 51.5% of sales versus 51.3% a year ago, indicating pricing and sourcing discipline despite a rising cost environment.

Expense growth remained controlled relative to sales. Selling, general and administrative costs rose to $1.51 billion, but declined to 33% of sales from 33.4% last year. Operating income climbed to $841.6 million, with operating margin improving to 18.5% from 17.9%, underscoring a focus on productivity and prudent expense management.

ORLY Converts Earnings Into Cash and Share ReductionCash generation was a standout. Net cash provided by operating activities was $1.03 billion in the quarter, up from $755.1 million in the year-ago period, supported by higher earnings and favorable working-capital movements.

This strong cash generation supported an aggressive capital return program. Capital expenditures were $244.4 million, and free cash flow totaled $785.1 million. ORLY repurchased 10 million shares for $923 million at an average price of $92.45 in the first quarter. From the end of the first quarter until April 29, 2026, it bought an additional 3.6 million shares for $338 million at an average price of $92.83.

O’Reilly’s Balance Sheet Reflects Inventory InvestmentAs of March 31, 2026, O’Reilly’s cash and cash equivalents totaled $252.6 million, up from $191.2 million a year earlier. Inventory rose to $5.81 billion from $5.17 billion, reflecting a larger store base and the need to support high service levels across both customer segments.

On the funding side, as of March 31, 2026, long-term debt rose to $6.2 billion from $5.65 billion a year ago. Accounts payable increased to $7.24 billion from $6.54 billion, mainly reflecting higher inventory levels. Overall, total assets grew to $16.94 billion from $15.29 billion in the same period last year.

ORLY Lifts 2026 Outlook Across Key Operating TargetsThe company maintained its full-year outlook, with total revenues expected between $18.7 billion and $19 billion. Gross margin is projected in the range of 51.5-52%. The effective tax rate is expected to be 22.6%.

It continues to expect 225-235 new store openings and comparable store sales growth of 3-5%. Cash flow guidance remains unchanged, with operating cash flow of $3.1-$3.5 billion, capital spending of $1.3-$1.4 billion, and free cash flow of $1.8-$2.1 billion.

The company now expects operating margin to be in the range of 19.3-19.8%, up slightly from the previous outlook of 19.2-19.7%. Diluted earnings per share are projected between $3.15 and $3.25 compared with the earlier guidance of $3.10-$3.20.

ORLY currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Releases From Auto SpaceAutoliv, Inc. (ALV - Free Report) reported first-quarter 2026 results on April 17. It posted adjusted earnings of $2.05 per share, which declined 4.7% year over year but surpassed the Zacks Consensus Estimate of $1.77 by 15.8%. Net sales were $2.75 billion, up 6.8% from the year-ago quarter and above the Zacks Consensus Estimate of $2.63 billion by 4.52%.

Autoliv ended the quarter with cash and cash equivalents of $342 million compared with $322 million a year earlier. Long-term debt was $1.7 billion compared with $1.56 billion in the year- ago period. Shareholder returns continued through dividends. Autoliv paid a cash dividend of 87 cents per share in the quarter, with total dividend payments of $65 million.

Genuine Parts Company (GPC - Free Report)  reported its first-quarter 2026 results on April 21. It posted adjusted earnings of $1.77 per share, which missed the Zacks Consensus Estimate of $1.81 by 1.94%. The bottom line improved 1.1% from the year-ago quarter’s adjusted earnings of $1.75 per share. The company posted revenues of $6.27 billion, which beat the Zacks Consensus Estimate of $6.17 billion by 1.5% and increased 6.8% year over year. The performance was driven by solid sales growth across business segments and a 20-basis-point improvement in gross margin to 37.3%.

GPC’s total liquidity was $1.3 billion as of March 31, 2026, including $500 million in cash and $838 million of revolver capacity. During the quarter, GPC invested $98 million in capex and $14 million in acquisitions while returning $142 million to shareholders via dividends. For 2026, the company targets $450-$500 million in capex and $300-$350 million in M&A, with approximately 7.5 million shares remaining under its repurchase authorization.

Comparable Store Sales Growth: 8.1% increase, surpassing expectations.Total Sales Growth: 10.2% increase for the first quarter of 2026.Operating Profit: 14% in

On May 13, 2026, we delve into the discounted cash flow (DCF) analysis for O'Reilly Automotive Inc (ORLY). The company has experienced a slight decline in its s

Growth investors focus on stocks that are seeing above-average financial growth, as this feature helps these securities garner the market's attention and deliver solid returns. However, it isn't easy to find a great growth stock.

That's because, these stocks usually carry above-average risk and volatility. In fact, betting on a stock for which the growth story is actually over or nearing its end could lead to significant loss.

However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.

Our proprietary system currently recommends O'Reilly Automotive (ORLY - Free Report) as one such stock. This company not only has a favorable Growth Score, but also carries a top Zacks Rank.

Studies have shown that stocks with the best growth features consistently outperform the market. And for stocks that have a combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy), returns are even better.

While there are numerous reasons why the stock of this auto parts retailer is a great growth pick right now, we have highlighted three of the most important factors below:

Earnings GrowthArguably nothing is more important than earnings growth, as surging profit levels is what most investors are after. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.

While the historical EPS growth rate for O'Reilly Automotive is 10.5%, investors should actually focus on the projected growth. The company's EPS is expected to grow 9.2% this year, crushing the industry average, which calls for EPS growth of 4%.

Cash Flow GrowthCash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.

Right now, year-over-year cash flow growth for O'Reilly Automotive is 6.1%, which is higher than many of its peers. In fact, the rate compares to the industry average of 5.6%.

While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 8.1% over the past 3-5 years versus the industry average of 4.1%.

Promising Earnings Estimate RevisionsBeyond the metrics outlined above, investors should consider the trend in earnings estimate revisions. A positive trend is a plus here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The current-year earnings estimates for O'Reilly Automotive have been revising upward. The Zacks Consensus Estimate for the current year has surged 0.5% over the past month.

Bottom LineWhile the overall earnings estimate revisions have made O'Reilly Automotive a Zacks Rank #2 stock, it has earned itself a Growth Score of B based on a number of factors, including the ones discussed above.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This combination indicates that O'Reilly Automotive is a potential outperformer and a solid choice for growth investors.

It has been about a month since the last earnings report for O'Reilly Automotive (ORLY - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is O'Reilly Automotive due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

O'Reilly Q1 Earnings Surpass Estimates on Strong Comps GrowthO’Reilly reported first-quarter 2026 adjusted earnings per share (EPS) of 72 cents, which beat the Zacks Consensus Estimate of 69 cents by 4.18%. The bottom line increased from 62 cents in the prior-year quarter.

The automotive parts retailer registered quarterly revenues of $4.56 billion, which surpassed the Zacks Consensus Estimate of $4.47 billion by 2.1%. The top line also rose 10.2% year over year.

The quarter was driven by strong demand, with comparable store sales rising 8.1%. Growth in both the professional and DIY segments, along with careful cost control, supported the overall performance. The company opened 59 stores in the United States, Mexico and Canada in the first quarter. The total store count was 6,644 as of March 31, 2026.

ORLY’s Sales Mix Highlights Professional MomentumA key feature of the quarter was the continued weight of the professional service provider channel. Sales to professional customers were $2.29 billion, up from $2 billion a year ago, reflecting meaningful growth in the company’s higher-frequency commercial business.

Do-it-yourself demand also contributed, with DIY sales of $2.19 billion versus $2.05 billion in the prior-year quarter. Other sales and adjustments were $79.6 million compared with $86.5 million last year, leaving the mix largely driven by the two core customer groups.

O’Reilly Expands Profit Dollars as Sales ScaleO’Reilly translated the higher sales base into improved profit dollars. Gross profit increased to $2.35 billion, and gross margin held firm at 51.5% of sales versus 51.3% a year ago, indicating pricing and sourcing discipline despite a rising cost environment.

Expense growth remained controlled relative to sales. Selling, general and administrative costs rose to $1.51 billion, but declined to 33% of sales from 33.4% last year. Operating income climbed to $841.6 million, with operating margin improving to 18.5% from 17.9%, underscoring a focus on productivity and prudent expense management.

ORLY Converts Earnings Into Cash and Share ReductionCash generation was a standout. Net cash provided by operating activities was $1.03 billion in the quarter, up from $755.1 million in the year-ago period, supported by higher earnings and favorable working-capital movements.

This strong cash generation supported an aggressive capital return program. Capital expenditures were $244.4 million, and free cash flow totaled $785.1 million. ORLY repurchased 10 million shares for $923 million at an average price of $92.45 in the first quarter. From the end of the first quarter until April 29, 2026, it bought an additional 3.6 million shares for $338 million at an average price of $92.83.

O’Reilly’s Balance Sheet Reflects Inventory InvestmentAs of March 31, 2026, O’Reilly’s cash and cash equivalents totaled $252.6 million, up from $191.2 million a year earlier. Inventory rose to $5.81 billion from $5.17 billion, reflecting a larger store base and the need to support high service levels across both customer segments.

On the funding side, as of March 31, 2026, long-term debt rose to $6.2 billion from $5.65 billion a year ago. Accounts payable increased to $7.24 billion from $6.54 billion, mainly reflecting higher inventory levels. Overall, total assets grew to $16.94 billion from $15.29 billion in the same period last year.

ORLY Lifts 2026 Outlook Across Key Operating TargetsThe company maintained its full-year outlook, with total revenues expected between $18.7 billion and $19 billion. Gross margin is projected in the range of 51.5-52%. The effective tax rate is expected to be 22.6%.

It continues to expect 225-235 new store openings and comparable store sales growth of 3-5%. Cash flow guidance remains unchanged, with operating cash flow of $3.1-$3.5 billion, capital spending of $1.3-$1.4 billion, and free cash flow of $1.8-$2.1 billion.

The company now expects operating margin to be in the range of 19.3-19.8%, up slightly from the previous outlook of 19.2-19.7%. Diluted earnings per share are projected between $3.15 and $3.25 compared with the earlier guidance of $3.10-$3.20.

How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a upward trend in fresh estimates.

The consensus estimate has shifted -8.66% due to these changes.

VGM ScoresAt this time, O'Reilly Automotive has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a score of D on the value side, putting it in the bottom 40% for value investors.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise O'Reilly Automotive has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

On June 10, 2026, we delve into the DCF analysis for O'Reilly Automotive Inc (ORLY), a company that has shown mixed price performance recently. Over the past we

On May 22, 2026, Cadence Design Systems Inc (CDNS) shares rose 4.2% today, bringing the current price to $373.59. Over the past year, CDNS has experienced a pri

It has been about a month since the last earnings report for Cadence Design Systems (CDNS - Free Report) . Shares have added about 17.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cadence due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Cadence Design Systems, Inc. before we dive into how investors and analysts have reacted as of late.

Cadence Q1 Earnings Top EstimatesCadence delivered a strong first quarter of 2026, driven by broad-based demand for its AI-oriented portfolio amid robust design activity. Non-GAAP earnings per share (EPS) of $1.96 beat the Zacks Consensus Estimate by 4.3%, increased 24.8% year over year and topped management’s guided range of $1.89 to $1.95.

Revenues of $1.474 billion beat the Zacks Consensus Estimate by 1.7% and increased 19% year over year. The figure beat management’s guided range of $1.42-$1.46 billion.

On the earnings call, the company emphasized its agentic AI strategy, including the launch of AgentStack and new AI Super Agents (ViraStack and InnoStack) that are designed to automate more of the chip design workflow. Cadence expects agentic tools to drive higher EDA consumption and usage across its platform as customers run more simulations, verification and implementation cycles.

A standout metric was a record backlog of $8 billion, driven by strong bookings. Strong backlog and accelerating AI demand led to a raise in its 2026 revenue outlook.

Cadence raised its full-year 2026 revenue outlook to a band of $6.125-$6.225 billion, compared with the earlier guided range of $5.9-$6 billion. The Zacks Consensus Estimate is currently $5.99 billion.

Non-GAAP EPS for 2026 is now expected to be between $7.85 and $7.95, compared with the earlier guided range of $8.05 to $8.15. The Zacks Consensus Estimate is currently pinned at $8.16 per share.

Cadence noted that the bottom-line performance would primarily be impacted by Hexagon’s Design & Engineering business acquisition, which will add about $160 million to revenues but would be dilutive to the bottom line by nearly 28 cents. The deal was funded using 70% cash and 30% stock. It expects the buyout to be accretive in 2027.

Segment PerformanceProduct & Maintenance revenues (91.5% of total revenues) of $1.349 billion rose 21.4% year over year. Services revenues (8.5%) of $125 million fell 4.6% year over year.

Recurring revenues comprised 77% of total revenues, while the remaining were upfront revenues.

The Americas contributed 45% of revenues, while China accounted for 13%, Other Asia 20%, Europe, Middle East and Africa 16% and Japan 6%, pointing to diversified demand across geographies.

Product-wise, Core EDA, Intellectual Property (“IP”) and Systems Design & Analysis accounted for 71%, 14% and 15% of total revenues, respectively.

The System Design & Analysis business, up 18% in the first quarter, is gaining from higher demand for 3D-IC, Sigrity and Clarity.

Core EDA business, which includes Custom IC, Digital IC and Functional Verification, experienced 18% year-over-year growth.

The demand for new hardware systems continued to gain traction, driven by AI/HPC, automotive and robotics. Apart from Palladium and Protium systems, solutions such as Xcelium, Verisium SimAI and ChipStack are being explored by customers, with large evaluations underway, added Cadence. Cerebrus and AI-driven Virtuoso Studio are also seeing strong momentum.

The IP business was up 22% year over year in the first quarter, benefiting from a broadening silicon solutions portfolio and increasing demand for solutions in AI, HPC and automotive use cases. The company is witnessing higher demand for its Star IP portfolio across interface, memory and foundation IP amid higher complexity of advanced node designs and chiplet-based architectures.

Profitability NumbersNon-GAAP gross margin contracted 40 basis points (bps) to 88%.

Total non-GAAP costs and expenses increased 12.6% year over year to $815 million.

However, non-GAAP operating margin expanded 300 bps on a year-over-year basis to 44.7%.

Balance Sheet & Cash FlowAs of March 31, 2026, Cash and cash equivalents were $1.407 billion compared with $3 billion as of Dec. 31, 2025.

Long-term debt was $2.481 billion as of March 31, 2026, compared with $2.48 billion as of Dec. 31.

Cadence generated an operating cash flow of $356 million in the reported quarter compared with the prior quarter’s $553 million. Free cash flow was $307 million compared with $512 million in the previous quarter.

The company repurchased its shares worth $200 million in the first quarter.

OutlookNon-GAAP operating margin for 2026 is now forecasted to be in the band of 43.5% to 44.5%, compared with 44.75% to 45.75% range guided earlier.

Also, operating cash flow is expected to be in the range of $1.875 billion to $1.975 billion compared with $2 billion projected earlier. The company expects to utilize at least 50% of its free cash flow to repurchase shares in 2026.

For the second quarter of 2026, revenues are estimated to be $1.555-$1.595 billion. The company reported sales of $1.275 billion in the year-ago quarter.

Non-GAAP EPS is anticipated to be between $2.02 and $2.08. The company reported an EPS of $1.65 in the year-ago quarter.

Non-GAAP operating margin is estimated to be between 44.5% and 45.5% in the second quarter.

How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 12.89% due to these changes.

VGM ScoresAt this time, Cadence has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Cadence has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry PlayerCadence belongs to the Zacks Computer - Software industry. Another stock from the same industry, SAP (SAP - Free Report) , has gained 1% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

SAP reported revenues of $11.18 billion in the last reported quarter, representing a year-over-year change of +17.9%. EPS of $2.01 for the same period compares with $1.51 a year ago.

For the current quarter, SAP is expected to post earnings of $2.06 per share, indicating a change of +21.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.8% over the last 30 days.

SAP has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

Cadence Design Systems, Inc. (CDNS - Free Report) reached a significant support level, and could be a good pick for investors from a technical perspective. Recently, CDNS's 50-day simple moving average broke out above its 200-day moving average; this is known as a "golden cross."

There's a reason traders love a golden cross -- it's a technical chart pattern that can indicate a bullish breakout is on the horizon. This kind of crossover is formed when a stock's short-term moving average breaks above a longer-term moving average. Typically, a golden cross involves the 50-day and the 200-day moving averages, since bigger time periods tend to form stronger breakouts.

Golden crosses have three key stages that investors look out for. It starts with a downtrend in a stock's price that eventually bottoms out, followed by the stock's shorter moving average crossing over its longer moving average and triggering a trend reversal. The final stage is when a stock continues the upward climb to higher prices.

This kind of chart pattern is the opposite of a death cross, which is a technical event that suggests future bearish price movement.

Shares of CDNS have been moving higher over the past four weeks, up 13.4%. Plus, the company is currently a #3 (Hold) on the Zacks Rank, suggesting that CDNS could be poised for a breakout.

Once investors consider CDNS's positive earnings outlook for the current quarter, the bullish case only solidifies. No earnings estimate has gone lower in the past two months compared to 2 revisions higher, and the Zacks Consensus Estimate has increased as well.

Investors should think about putting CDNSon their watchlist given the ultra-important technical indicator and positive move in earnings estimates.

At Computex 2026, Cadence (Nasdaq: CDNS) announced the industry's first fully autonomous virtual agentic AI design engineer, extending the ChipStack™ AI Supe

As drug discovery moves from trial-and-error to digital simulation, choosing between Recursion Pharmaceuticals (RXRX +1.11%) and Schrödinger (SDGR 1.85%) depends on whether you prefer a biotech-heavy or software-focused investment approach.

Recursion seeks to industrialize drug discovery by using massive datasets and artificial intelligence to map biology. Schrödinger provides the computational platform used by thousands of researchers, combining a software-as-a-service model with high-upside drug development programs. Both companies represent the frontier of the movement to make medicine faster and cheaper to develop.

Recursion is building an industrialized engine for medicine. It operates among biotech stocks, selling access to its proprietary platform and pursuing joint development with major partners like Roche (RHHBY +1.07%) and Bayer (BAYZF +0.71%). The company uses massive datasets and automation to identify new drug candidates. This customer concentration adds a layer of risk to the business, as it depends on a few large entities for all of its near-term revenue.

In FY 2025, revenue reached nearly $74.7 million, representing approximately 26.9% growth over the prior year. Despite this growth, the company reported a net loss of roughly $644.8 million. This loss reflects the high costs of running clinical trials and maintaining a vast digital infrastructure needed to process biological data.

As of its December 2025 balance sheet, the debt-to-equity ratio is approximately 0.1x. This ratio measures total debt against shareholder equity, showing that the company relies very little on borrowed money to fund its operations. Free cash flow for the period was a negative $378.3 million.

The case for SchrödingerSchrödinger sells a physics-based computational platform used by researchers globally. Its software helps scientists predict how molecules will behave, significantly speeding up the discovery of new medicines and materials. Major collaborators include Bristol Myers Squibb (BMY +0.49%) and Novartis, (NVS 0.39%) providing a mix of software fees and milestone-based payments. The company also pursues its own proprietary drug discovery programs to capture more value from its technology.

For FY 2025, the company generated revenue of approximately $255.9 million. This was an increase of nearly 23.3% compared to the previous year. The company reported a net loss of roughly $103.3 million, which represents a notable improvement from the heavier losses recorded in fiscal year 2024. These figures suggest the company is making progress toward stabilizing its bottom line while growing its software footprint. Free cash flow for FY 2025 was roughly $12.5 million.

Risk profile comparisonRecursion faces significant regulatory hurdles because it currently has no products approved for sale. It relies on a small group of partners, and the termination of any agreement with a company like Roche could hurt its revenue. Additionally, it faces stiff competition from larger firms with deeper pockets. The company also carries risks related to potential cybersecurity breaches that could compromise its proprietary AI datasets.

Schrödinger depends on software sales cycles that can last nearly a year, making its revenue somewhat unpredictable. It competes with established technology firms like Dassault Systèmes (DASTY 7.00%) and Cadence Design Systems (CDNS +0.10%). The company also carries risks related to its drug development programs, where trial delays or poor results can impact its stock price. Furthermore, it relies on third-party cloud infrastructure to deliver its services to customers.

Valuation comparisonSchrödinger appears more established with a lower P/S ratio, while Recursion trades at a significant premium based on its future potential.

MetricRecursion PharmaceuticalsSchrödingerP/S ratio26.1x4.3xWhich stock would I buy in 2026?I wouldn’t buy either of these stocks right now. Recursion was founded in 2013 with a goal of speeding up the development process. It is still a clinical-stage business with no products to sell. It doesn’t even have any candidates in phase 3 testing yet. If you’re considering this stock, it’s probably best to wait until it proves it can develop at least one new drug in a timely manner.

If I had to choose one of these stocks, I’d go with Shrodinger. Instead of depending on successful clinical trials, the company depends on the continued growth of its already successful software business. Annual contract value at the end of the first quarter grew 12% year over year to $28.4 million.

I’m not going to even consider buying Schrodinger right now because it’s still reporting significant losses. In the first quarter, the company lost $60 million.

While Schrodinger is losing money now, its bottom line is heading in the right direction. Management expects operating expenses to fall significantly in 2026. Annual contract value, though, is expected to climb by 10% to 15% this year.

Cadence Design Systems (CDNS - Free Report) ended the recent trading session at $408.00, demonstrating a -2.01% change from the preceding day's closing price. This move lagged the S&P 500's daily loss of 0.74%. At the same time, the Dow lost 1.21%, and the tech-heavy Nasdaq lost 0.89%.

The stock of maker of hardware and software products for validating chip designs has risen by 17.75% in the past month, leading the Computer and Technology sector's gain of 11.4% and the S&P 500's gain of 5.39%.

The investment community will be paying close attention to the earnings performance of Cadence Design Systems in its upcoming release. In that report, analysts expect Cadence Design Systems to post earnings of $2.05 per share. This would mark year-over-year growth of 24.24%. Simultaneously, our latest consensus estimate expects the revenue to be $1.58 billion, showing a 23.58% escalation compared to the year-ago quarter.

CDNS's full-year Zacks Consensus Estimates are calling for earnings of $7.94 per share and revenue of $6.2 billion. These results would represent year-over-year changes of +11.2% and +17.11%, respectively.

Investors might also notice recent changes to analyst estimates for Cadence Design Systems. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.14% upward. Cadence Design Systems currently has a Zacks Rank of #3 (Hold).

In terms of valuation, Cadence Design Systems is currently trading at a Forward P/E ratio of 52.46. For comparison, its industry has an average Forward P/E of 16.28, which means Cadence Design Systems is trading at a premium to the group.

Also, we should mention that CDNS has a PEG ratio of 3.87. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. As of the close of trade yesterday, the Computer - Software industry held an average PEG ratio of 1.66.

The Computer - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 151, putting it in the bottom 39% of all 250+ industries.

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

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

Cadence Design Systems is rated Buy with a 12-month price target of $470, driven by exponential semiconductor complexity and AI chip ecosystem demand. Q1 revenue grew 19% YoY to $1.47B, with a record $8B backlog and double-digit growth across all segments, indicating robust and compounding demand. CDNS's entrenched EDA software, AI-driven workflows, and expanding SDA segment create a durable moat and long-term growth visibility beyond semiconductors.

When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Cadence Design Systems (CDNS - Free Report) .

Cadence currently has an average brokerage recommendation (ABR) of 1.39, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 23 brokerage firms. An ABR of 1.39 approximates between Strong Buy and Buy.

Of the 23 recommendations that derive the current ABR, 18 are Strong Buy and one is Buy. Strong Buy and Buy respectively account for 78.3% and 4.4% of all recommendations.

Brokerage Recommendation Trends for CDNS

Check price target & stock forecast for Cadence here>>>

While the ABR calls for buying Cadence, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABRAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Should You Invest in CDNS?In terms of earnings estimate revisions for Cadence, the Zacks Consensus Estimate for the current year has remained unchanged over the past month at $7.94.

Analysts' steady views regarding the company's earnings prospects, as indicated by an unchanged consensus estimate, could be a legitimate reason for the stock to perform in line with the broader market in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Cadence. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

It may therefore be prudent to be a little cautious with the Buy-equivalent ABR for Cadence.

Cadence Design Systems, Inc. (CDNS) Presents at 54th Nasdaq & Jefferies Investor Conference Transcript

That escalated quickly.

Investors' favorite trade is suddenly the one they can't stop betting against, even as it keeps going lower.

Chip stocks in the VanEck Semiconductor ETF (SMH) are down on Tuesday. The ETF is now off more than 10% from the record high reached last week, and options traders are betting it will get worse.

The VanEck Semiconductor ETF (SMH) in the past five trading days

Put volume outnumbered call volume by a factor of four as of midday Tuesday, according to data from ThinkOrSwim, and traders bought more than five times as many puts as calls. Of the almost $350 million in premium traded on SMH, $260 million was tied to puts, SpotGamma data show.

The price action is a brutal about-face for investors who couldn't get enough of hardware stocks tied to the artificial intelligence buildout. However, for options traders who had been leaning bearish recently, the persistent put-buying in the face of deep selling is a sign some of the sector's biggest cheerleaders are looking elsewhere.

"Friday's selloff was never going to be a one-hit wonder," Don Kaufman, co-founder of TheoTrade, said by phone. "All these SMH put-buyers are going to force market-makers to short the stock or sell Nasdaq futures which creates a very similar feedback to loop to what was causing it to go higher, but the downside can be exacerbated when money managers or retail [traders] panic."

The bearish sentiment around SMH is showing up in the broader tech-heavy Nasdaq 100, where options volumes in the Invesco QQQ ETF also skewed toward puts. Of the $3.7 billion traded in QQQ options Tuesday, about $2.5 billion was in puts.

The most popular contract in QQQ by dollar amount and volume is currently the in-the-money 700-strike put expiring on Tuesday, with $44 million in premium exchanged. The runner-up is the 715-strike put expiring next Monday, which traded $35 million as of writing.

Even trading in the Roundhill Memory ETF (DRAM) – which had been seeing more persistent call-buying and more balanced volumes overall – started to turn sour as Tuesday's session worsened. Traders bought more than 24,000 puts in that fund, compared with under 15,000 calls.

watch now

U.S. stocks slid Tuesday as the rotation out of high-flying chip and artificial-intelligence names resumed, dragging the Nasdaq 100 down over 3% and pulling the S&P 500 back below 7,300.

• iShares Russell 2000 Index Fund shares are experiencing downward pressure. Why are IWM shares declining?

A parallel collapse in oil prices — crude sank roughly 6% as Israel and Iran halted strikes — did little to steady equities ahead of Wednesday’s pivotal consumer price report. Rather than cuts, markets are now pricing roughly even odds of around 50% that the Federal Reserve delivers a rate hike as soon as October, a hawkish tilt that continues to pressure the most richly valued corners of the market.

President Donald Trump said on social media that a U.S. helicopter was shot down while conducting a patrol mission over the Strait of Hormuz. He stated that the aircraft had two pilots on board, both of whom are safe, but added that the U.S. “must respond to the attack.”

Across U.S. equity markets by midday Tuesday, losses were broad but concentrated in technology.

The S&P 500 fell 1.6% to about 7,228, while the Dow Jones Industrial Average proved more resilient, slipping 0.5% to 50,535 as defensive and financial names cushioned the blow.

The Nasdaq 100 bore the brunt of the selling, sliding 3.3% to around 28,437. The small-cap Russell 2000 gave back an early advance to trade down about 1.3%.

The VIX soared 14%. Gold offered no haven, with prices easing 2% to around $4,264 an ounce, while silver crushed over 5%.

Tuesday’s Performance In Major U.S. IndicesAccording to the Benzinga Pro platform:

AI-Optical Complex Implodes While Staples Catch The BidThe Technology Select Sector SPDR Fund (NYSE:XLK) was the session’s clear laggard, sinking 5.1%

Energy was the other soft spot as the Energy Select Sector SPDR Fund (NYSE:XLE) slid 2.3% alongside crude’s drop, though it remains the year’s best sector at up 28.3%.

Beyond the tape, OpenAI confidentially filed for an IPO after Monday’s close – a week after rival Anthropic – while SpaceX is slated to make its market debut Friday in what could be the largest listing on record.

Tuesday’s Russell 1000 Top GainersTuesday’s Russell 1000 Top LosersPhoto: Shutterstock

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