CADENCE DESIGN SYS INC (CDNS)
US1273871087 - Common Stock
We assign a fundamental rating of 7 out of 10 to CDNS. CDNS was compared to 276 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 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.
CDNS had positive earnings in each of the past 5 years.
Each year in the past 5 years CDNS had a positive operating cash flow.
1.2 Ratios
CDNS's Return On Assets of 18.36% is amongst the best of the industry. CDNS outperforms 97.45% of its industry peers.
Looking at the Return On Equity, with a value of 30.58%, CDNS belongs to the top of the industry, outperforming 94.53% of the companies in the same industry.
CDNS has a Return On Invested Capital of 25.13%. This is amongst the best in the industry. CDNS outperforms 97.81% 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 10.12%.
The last Return On Invested Capital (25.13%) for CDNS is above the 3 year average (22.02%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.36% | ||
| ROE | 30.58% | ||
| ROIC | 25.13% |
ROA(3y)16.92%
ROA(5y)19.03%
ROE(3y)28.97%
ROE(5y)31.53%
ROIC(3y)22.02%
ROIC(5y)19.61%
1.3 Margins
CDNS's Profit Margin of 25.45% is amongst the best of the industry. CDNS outperforms 93.80% of its industry peers.
In the last couple of years the Profit Margin of CDNS has grown nicely.
CDNS has a Operating Margin of 30.86%. This is amongst the best in the industry. CDNS outperforms 97.08% of its industry peers.
CDNS's Operating Margin has improved in the last couple of years.
CDNS has a Gross Margin of 89.36%. This is amongst the best in the industry. CDNS outperforms 96.72% 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 | 30.86% | ||
| PM (TTM) | 25.45% | ||
| GM | 89.36% |
OM growth 3Y8.14%
OM growth 5Y10.13%
PM growth 3Y4.96%
PM growth 5Y9.5%
GM growth 3Y0.28%
GM growth 5Y0.33%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so CDNS is creating value.
The number of shares outstanding for CDNS has been reduced compared to 1 year ago.
The number of shares outstanding for CDNS has been reduced compared to 5 years ago.
The debt/assets ratio for CDNS has been reduced compared to a year ago.
2.2 Solvency
CDNS has an Altman-Z score of 22.81. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
CDNS's Altman-Z score of 22.81 is amongst the best of the industry. CDNS outperforms 97.45% of its industry peers.
The Debt to FCF ratio of CDNS is 0.52, which is an excellent value as it means it would take CDNS, only 0.52 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 0.52, CDNS belongs to the best of the industry, outperforming 81.02% of the companies in the same industry.
CDNS has a Debt/Equity ratio of 0.09. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.09, CDNS is in line with its industry, outperforming 56.20% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.09 | ||
| Debt/FCF | 0.52 | ||
| Altman-Z | 22.81 |
ROIC/WACC2.52
WACC9.98%
2.3 Liquidity
CDNS has a Current Ratio of 1.24. This is a normal value and indicates that CDNS is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of CDNS (1.24) is worse than 65.69% of its industry peers.
A Quick Ratio of 1.13 indicates that CDNS should not have too much problems paying its short term obligations.
The Quick ratio of CDNS (1.13) is worse than 69.34% of its industry peers.
The current and quick ratio evaluation for CDNS is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.24 | ||
| Quick Ratio | 1.13 |
3. Growth
3.1 Past
CDNS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.61%, which is quite impressive.
The Earnings Per Share has been growing by 22.59% on average over the past years. This is a very strong growth
The Revenue has grown by 14.83% in the past year. This is quite good.
CDNS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 13.85% yearly.
EPS 1Y (TTM)20.61%
EPS 3Y22.67%
EPS 5Y22.59%
EPS growth Q2Q43.75%
Revenue 1Y (TTM)14.83%
Revenue growth 3Y15.09%
Revenue growth 5Y13.85%
Revenue growth Q2Q18.75%
3.2 Future
Based on estimates for the next years, CDNS will show a quite strong growth in Earnings Per Share. The EPS will grow by 17.03% on average per year.
The Revenue is expected to grow by 12.13% on average over the next years. This is quite good.
EPS Next Y17.57%
EPS Next 2Y17.26%
EPS Next 3Y19.07%
EPS Next 5Y17.03%
Revenue Next Year12.36%
Revenue Next 2Y12.69%
Revenue Next 3Y13.45%
Revenue Next 5Y12.13%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 53.80, which means the current valuation is very expensive for CDNS.
Compared to the rest of the industry, the Price/Earnings ratio of CDNS indicates a somewhat cheap valuation: CDNS is cheaper than 63.87% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 25.25. CDNS is valued rather expensively when compared to this.
With a Price/Forward Earnings ratio of 45.76, CDNS can be considered very expensive at the moment.
60.58% of the companies in the same industry are more expensive than CDNS, based on the Price/Forward Earnings ratio.
CDNS's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.67.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 53.8 | ||
| Fwd PE | 45.76 |
4.2 Price Multiples
68.25% of the companies in the same industry are more expensive than CDNS, based on the Enterprise Value to EBITDA ratio.
CDNS's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 60.59 | ||
| EV/EBITDA | 53.33 |
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.
CDNS has an outstanding profitability rating, which may justify a higher PE ratio.
CDNS's earnings are expected to grow with 19.07% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.06
PEG (5Y)2.38
EPS Next 2Y17.26%
EPS Next 3Y19.07%
5. Dividend
5.1 Amount
CDNS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
CADENCE DESIGN SYS INC
NASDAQ:CDNS (4/25/2024, 4:20:02 PM)
After market: 277.08 0 (0%)277.08
-0.58 (-0.21%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap75.53B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Dividend Growth(5Y)
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Div Incr Years
Div Non Decr Years
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Surprises & Revisions
EPS beat(2)
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EPS beat(8)
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EPS beat(16)
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PT rev (1m)
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EPS NQ rev (1m)
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Revenue NQ rev (1m)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 53.8 | ||
| Fwd PE | 45.76 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.06
PEG (5Y)2.38
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 18.36% | ||
| ROE | 30.58% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 30.86% | ||
| PM (TTM) | 25.45% | ||
| GM | 89.36% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.72
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.09 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.24 | ||
| Quick Ratio | 1.13 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)20.61%
EPS 3Y22.67%
EPS 5Y
EPS growth Q2Q
EPS Next Y17.57%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)14.83%
Revenue growth 3Y15.09%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
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OCF growth 3Y
OCF growth 5Y