CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
NASDAQ:CDNS - Nasdaq - US1273871087 - Common Stock - Currency: USD
CDNS gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 282 industry peers in the Software industry. CDNS gets an excellent profitability rating and is at the same time showing great financial health properties. CDNS shows excellent growth, but is valued quite expensive already. These ratings could make CDNS a good candidate for growth and quality investing.
1. Profitability
1.1 Basic Checks
In the past year CDNS was profitable.
In the past year CDNS had a positive cash flow from operations.
In the past 5 years CDNS has always been profitable.
CDNS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CDNS has a better Return On Assets (12.00%) than 89.36% of its industry peers.
CDNS has a Return On Equity of 22.64%. This is amongst the best in the industry. CDNS outperforms 87.94% of its industry peers.
CDNS has a Return On Invested Capital of 15.16%. This is amongst the best in the industry. CDNS outperforms 92.20% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CDNS is significantly above the industry average of 12.26%.
The 3 year average ROIC (20.16%) for CDNS is well above the current ROIC(15.16%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12% | ||
| ROE | 22.64% | ||
| ROIC | 15.16% |
ROA(3y)15.55%
ROA(5y)15.49%
ROE(3y)28.03%
ROE(5y)26.64%
ROIC(3y)20.16%
ROIC(5y)18.92%
1.3 Margins
CDNS's Profit Margin of 22.19% is amongst the best of the industry. CDNS outperforms 90.43% of its industry peers.
In the last couple of years the Profit Margin of CDNS has declined.
The Operating Margin of CDNS (30.60%) is better than 94.68% of its industry peers.
In the last couple of years the Operating Margin of CDNS has grown nicely.
The Gross Margin of CDNS (85.86%) is better than 94.33% of its industry peers.
In the last couple of years the Gross Margin of CDNS has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 30.6% | ||
| PM (TTM) | 22.19% | ||
| GM | 85.86% |
OM growth 3Y4.75%
OM growth 5Y6.92%
PM growth 3Y-0.79%
PM growth 5Y-11.69%
GM growth 3Y-1.39%
GM growth 5Y-0.58%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), CDNS is creating value.
Compared to 1 year ago, CDNS has more shares outstanding
Compared to 5 years ago, CDNS has less shares outstanding
The debt/assets ratio for CDNS is higher compared to a year ago.
2.2 Solvency
CDNS has an Altman-Z score of 15.05. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of CDNS (15.05) is better than 89.72% of its industry peers.
CDNS has a debt to FCF ratio of 1.80. This is a very positive value and a sign of high solvency as it would only need 1.80 years to pay back of all of its debts.
CDNS has a better Debt to FCF ratio (1.80) than 69.15% of its industry peers.
CDNS has a Debt/Equity ratio of 0.52. This is a neutral value indicating CDNS is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.52, CDNS is doing worse than 65.25% of the companies in the same industry.
Even though the debt/equity ratio score it not favorable for CDNS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 1.8 | ||
| Altman-Z | 15.05 |
ROIC/WACC1.39
WACC10.91%
2.3 Liquidity
CDNS has a Current Ratio of 3.07. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 3.07, CDNS is in the better half of the industry, outperforming 78.01% of the companies in the same industry.
A Quick Ratio of 2.90 indicates that CDNS has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 2.90, CDNS is in the better half of the industry, outperforming 76.95% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.07 | ||
| Quick Ratio | 2.9 |
3. Growth
3.1 Past
CDNS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 26.64%, which is quite impressive.
The Earnings Per Share has been growing by 22.21% on average over the past years. This is a very strong growth
CDNS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 19.55%.
Measured over the past years, CDNS shows a quite strong growth in Revenue. The Revenue has been growing by 14.72% on average per year.
EPS 1Y (TTM)26.64%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%34.19%
Revenue 1Y (TTM)19.55%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%23.12%
3.2 Future
The Earnings Per Share is expected to grow by 10.75% on average over the next years. This is quite good.
The Revenue is expected to grow by 9.79% on average over the next years. This is quite good.
EPS Next Y15.94%
EPS Next 2Y15.18%
EPS Next 3Y14.75%
EPS Next 5Y10.75%
Revenue Next Year11.89%
Revenue Next 2Y11.81%
Revenue Next 3Y11.64%
Revenue Next 5Y9.79%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 51.30, which means the current valuation is very expensive for CDNS.
60.28% of the companies in the same industry are more expensive than CDNS, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 27.45. CDNS is valued rather expensively when compared to this.
The Price/Forward Earnings ratio is 41.26, which means the current valuation is very expensive for CDNS.
The rest of the industry has a similar Price/Forward Earnings ratio as CDNS.
CDNS's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 51.3 | ||
| Fwd PE | 41.26 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CDNS is valued a bit cheaper than the industry average as 64.89% of the companies are valued more expensively.
CDNS's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 64.74 | ||
| EV/EBITDA | 52.26 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates CDNS does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of CDNS may justify a higher PE ratio.
A more expensive valuation may be justified as CDNS's earnings are expected to grow with 14.75% in the coming years.
PEG (NY)3.22
PEG (5Y)2.31
EPS Next 2Y15.18%
EPS Next 3Y14.75%
5. Dividend
5.1 Amount
No dividends for CDNS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
326.81
+15.86 (+5.1%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.67%
Inst Owner Change0.4%
Ins Owners0.27%
Ins Owner Change9.34%
Market Cap89.23B
Analysts79.29
Price Target329.39 (0.79%)
Short Float %1.35%
Short Ratio1.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.25%
Min EPS beat(2)1.28%
Max EPS beat(2)3.21%
EPS beat(4)4
Avg EPS beat(4)4.65%
Min EPS beat(4)1.28%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)3.2%
EPS beat(12)12
Avg EPS beat(12)3.86%
EPS beat(16)16
Avg EPS beat(16)5%
Revenue beat(2)0
Avg Revenue beat(2)-1.48%
Min Revenue beat(2)-1.71%
Max Revenue beat(2)-1.24%
Revenue beat(4)1
Avg Revenue beat(4)-0.57%
Min Revenue beat(4)-1.71%
Max Revenue beat(4)0.87%
Revenue beat(8)2
Avg Revenue beat(8)-0.81%
Revenue beat(12)4
Avg Revenue beat(12)-0.45%
Revenue beat(16)6
Avg Revenue beat(16)-0.24%
PT rev (1m)1.7%
PT rev (3m)0.41%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.42%
EPS NY rev (1m)-0.15%
EPS NY rev (3m)0.93%
Revenue NQ rev (1m)0.08%
Revenue NQ rev (3m)0.39%
Revenue NY rev (1m)-0.47%
Revenue NY rev (3m)-0.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 51.3 | ||
| Fwd PE | 41.26 | ||
| P/S | 18.31 | ||
| P/FCF | 64.74 | ||
| P/OCF | 59.71 | ||
| P/B | 18.68 | ||
| P/tB | 50.35 | ||
| EV/EBITDA | 52.26 |
EPS(TTM)6.37
EY1.95%
EPS(NY)7.92
Fwd EY2.42%
FCF(TTM)5.05
FCFY1.54%
OCF(TTM)5.47
OCFY1.67%
SpS17.85
BVpS17.49
TBVpS6.49
PEG (NY)3.22
PEG (5Y)2.31
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12% | ||
| ROE | 22.64% | ||
| ROCE | 19.34% | ||
| ROIC | 15.16% | ||
| ROICexc | 23.7% | ||
| ROICexgc | 60.56% | ||
| OM | 30.6% | ||
| PM (TTM) | 22.19% | ||
| GM | 85.86% | ||
| FCFM | 28.28% |
ROA(3y)15.55%
ROA(5y)15.49%
ROE(3y)28.03%
ROE(5y)26.64%
ROIC(3y)20.16%
ROIC(5y)18.92%
ROICexc(3y)28.2%
ROICexc(5y)26.78%
ROICexgc(3y)72.83%
ROICexgc(5y)62.51%
ROCE(3y)25.95%
ROCE(5y)24.28%
ROICexcg growth 3Y4.04%
ROICexcg growth 5Y11.48%
ROICexc growth 3Y-4.84%
ROICexc growth 5Y2.66%
OM growth 3Y4.75%
OM growth 5Y6.92%
PM growth 3Y-0.79%
PM growth 5Y-11.69%
GM growth 3Y-1.39%
GM growth 5Y-0.58%
F-Score5
Asset Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 1.8 | ||
| Debt/EBITDA | 1.46 | ||
| Cap/Depr | 55.16% | ||
| Cap/Sales | 2.38% | ||
| Interest Coverage | 15.86 | ||
| Cash Conversion | 87.81% | ||
| Profit Quality | 127.46% | ||
| Current Ratio | 3.07 | ||
| Quick Ratio | 2.9 | ||
| Altman-Z | 15.05 |
F-Score5
WACC10.91%
ROIC/WACC1.39
Cap/Depr(3y)78.98%
Cap/Depr(5y)69.81%
Cap/Sales(3y)3.02%
Cap/Sales(5y)2.97%
Profit Quality(3y)119.1%
Profit Quality(5y)128.61%
High Growth Momentum
Growth
EPS 1Y (TTM)26.64%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%34.19%
EPS Next Y15.94%
EPS Next 2Y15.18%
EPS Next 3Y14.75%
EPS Next 5Y10.75%
Revenue 1Y (TTM)19.55%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%23.12%
Revenue Next Year11.89%
Revenue Next 2Y11.81%
Revenue Next 3Y11.64%
Revenue Next 5Y9.79%
EBIT growth 1Y24.2%
EBIT growth 3Y21.31%
EBIT growth 5Y22.65%
EBIT Next Year24.07%
EBIT Next 3Y16.97%
EBIT Next 5Y9.92%
FCF growth 1Y32.44%
FCF growth 3Y2.63%
FCF growth 5Y11.29%
OCF growth 1Y27.43%
OCF growth 3Y4.61%
OCF growth 5Y11.56%