Budget zoom is the name of the game for the Canon SX420, but the manufacturer seems to make too many cuts to shave a mere $100 off the PowerShot SX540.
While the megapixel count and sensor size is the same, the SX420 uses the more affordable CCD sensor style, which isn't uncommon for budget cameras. The problem is that's not all Canon did to lower the price. The burst speed is a paltry .5 fps, so it's not going to do well at any sort of action like sports, kids or wildlife. The SX420 also eliminates the manual modes (which may or may not be a problem for you, depending on whether or not you use them).
The SX420 also has a smaller zoom range at 42x. That smaller zoom lens is also slower at the widest end, a very narrow f/6.6 at full zoom. Translated into non-camera terms, it means the camera won't take good pictures at full zoom unless your are outdoors during the day.
Video is just 720p at 25 fps--so footage will be a bit choppy and not very well detailed. Battery life isn't great either at less than 200 photos per charge.
Canon's effort to offer zoom on a budget is appreciated, but consumers will get a better camera by going with a model that has a budget price because it's a few years old, not because it cut out lots of features. Take a look at the similarly priced cameras that offer more speed and better lenses before you settle on the SX420 like the Fujifilm S9900w, Pentax XG-1, or Nikon P600.