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Should Quality-Oriented Investors Explore CADENCE DESIGN SYS INC (NASDAQ:CDNS)?

By Mill Chart

Last update: Mar 21, 2024

Quality investors are looking for the best of the best. Companies which are growing steadily and consistently, but are also in excellent financial condition. We will have a look here to see if CADENCE DESIGN SYS INC (NASDAQ:CDNS) is suited for quality investing. Investors should of course do their own research, but we spotted CADENCE DESIGN SYS INC showing up in our Caviar Cruise quality screen, so it may be worth spending some more time on it.

Key Considerations for Quality Investors.

  • CADENCE DESIGN SYS INC has achieved substantial revenue growth over the past 5 years, with a 13.85% increase. This signifies the company's ability to successfully capture market opportunities and generate sustained revenue growth.
  • With a notable ROIC excluding cash and goodwill at 96.04%, CADENCE DESIGN SYS INC demonstrates its commitment to generating sustainable returns for shareholders. This metric emphasizes the company's effective use of capital and its ability to deliver long-term value.
  • With a favorable Debt/Free Cash Flow Ratio of 0.52, CADENCE DESIGN SYS INC showcases its sound financial discipline and cash flow management. This ratio indicates the company's ability to service its debt obligations while maintaining sufficient free cash flow for future investments or operational needs.
  • With a favorable Profit Quality (5-year) ratio of 121.0%, CADENCE DESIGN SYS INC showcases its ability to consistently deliver high-quality profits. This metric signifies the company's financial strength and its capacity to generate sustainable earnings over an extended period.
  • CADENCE DESIGN SYS INC has consistently achieved strong EBIT growth over the past 5 years, with a 25.38% increase. This underscores the company's effective management of its operating income and suggests a positive outlook for future profitability.
  • CADENCE DESIGN SYS INC demonstrates a remarkable trend where its EBIT 5-year growth exceeds its Revenue 5-year growth. This indicates the company's ability to enhance its profitability through improved cost control and operational efficiency.

What is the full fundamental picture of NASDAQ:CDNS telling us.

ChartMill assigns a Fundamental Rating to every stock. This score ranges from 0 to 10 and is updated daily. The score is determined by evaluating multiple fundamental indicators and properties.

Taking everything into account, CDNS scores 7 out of 10 in our fundamental rating. CDNS was compared to 280 industry peers in the Software industry. CDNS has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. CDNS is valued quite expensive, but it does show an excellent growth. These ratings could make CDNS a good candidate for growth and quality investing.

Our latest full fundamental report of CDNS contains the most current fundamental analsysis.

More ideas for quality investing can be found on ChartMill in our Caviar Cruise screen.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.

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CADENCE DESIGN SYS INC

NASDAQ:CDNS (5/24/2024, 7:19:03 PM)

After market: 294.06 -0.22 (-0.07%)

294.28

-0.41 (-0.14%)

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