CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
USA - NASDAQ:CDNS - US1273871087 - Common Stock
351.26 USD
+2.74 (+0.79%)
351.26 USD
0 (0%)
We assign a fundamental rating of 6 out of 10 to CDNS. CDNS was compared to 281 industry peers in the Software industry. While CDNS belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. CDNS is valued quite expensively, but it does show have an excellent growth rating. These ratings could make CDNS a good candidate for growth investing.
1. Profitability
1.1 Basic Checks
CDNS had positive earnings in the past year.
In the past year CDNS had a positive cash flow from operations.
Each year in the past 5 years CDNS has been profitable.
Each year in the past 5 years CDNS had a positive operating cash flow.
1.2 Ratios
CDNS has a Return On Assets of 10.64%. This is amongst the best in the industry. CDNS outperforms 87.19% of its industry peers.
With an excellent Return On Equity value of 20.21%, CDNS belongs to the best of the industry, outperforming 86.48% of the companies in the same industry.
With an excellent Return On Invested Capital value of 15.31%, CDNS belongs to the best of the industry, outperforming 91.81% of the companies in the same industry.
CDNS had an Average Return On Invested Capital over the past 3 years of 20.16%. This is significantly above the industry average of 11.95%.
The last Return On Invested Capital (15.31%) for CDNS is well below the 3 year average (20.16%), which needs to be investigated, but indicates that CDNS had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.64% | ||
| ROE | 20.21% | ||
| ROIC | 15.31% |
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
The Profit Margin of CDNS (19.88%) is better than 84.34% of its industry peers.
CDNS's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 30.74%, CDNS belongs to the best of the industry, outperforming 92.88% of the companies in the same industry.
In the last couple of years the Operating Margin of CDNS has grown nicely.
With an excellent Gross Margin value of 85.57%, CDNS belongs to the best of the industry, outperforming 92.88% of the companies in the same industry.
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 | 30.74% | ||
| PM (TTM) | 19.88% | ||
| GM | 85.57% |
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
CDNS has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
CDNS has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, CDNS has less shares outstanding
CDNS has a worse debt/assets ratio than last year.
2.2 Solvency
CDNS has a debt to FCF ratio of 1.56. This is a very positive value and a sign of high solvency as it would only need 1.56 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.56, CDNS is in the better half of the industry, outperforming 70.11% of the companies in the same industry.
A Debt/Equity ratio of 0.49 indicates that CDNS is not too dependend on debt financing.
The Debt to Equity ratio of CDNS (0.49) is worse than 65.12% of its industry peers.
Although CDNS does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.49 | ||
| Debt/FCF | 1.56 | ||
| Altman-Z | N/A |
ROIC/WACC1.36
WACC11.3%
2.3 Liquidity
CDNS has a Current Ratio of 2.82. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
CDNS has a Current ratio of 2.82. This is in the better half of the industry: CDNS outperforms 77.22% of its industry peers.
A Quick Ratio of 2.67 indicates that CDNS has no problem at all paying its short term obligations.
With a decent Quick ratio value of 2.67, CDNS is doing good in the industry, outperforming 75.44% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.82 | ||
| Quick Ratio | 2.67 |
3. Growth
3.1 Past
CDNS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 32.42%, which is quite impressive.
Measured over the past years, CDNS shows a very strong growth in Earnings Per Share. The EPS has been growing by 22.21% on average per year.
CDNS shows a strong growth in Revenue. In the last year, the Revenue has grown by 22.29%.
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)32.42%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%28.91%
Revenue 1Y (TTM)22.29%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%20.25%
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 12.88% on average per year.
Based on estimates for the next years, CDNS will show a quite strong growth in Revenue. The Revenue will grow by 11.65% on average per year.
EPS Next Y18.22%
EPS Next 2Y16.39%
EPS Next 3Y15.94%
EPS Next 5Y12.88%
Revenue Next Year13.22%
Revenue Next 2Y12.68%
Revenue Next 3Y12.62%
Revenue Next 5Y11.65%
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 estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 52.12, which means the current valuation is very expensive for CDNS.
Compared to the rest of the industry, the Price/Earnings ratio of CDNS is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 27.76, CDNS is valued quite expensively.
A Price/Forward Earnings ratio of 43.43 indicates a quite expensive valuation of CDNS.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CDNS is on the same level as its industry peers.
CDNS's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 23.18.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 52.12 | ||
| Fwd PE | 43.43 |
4.2 Price Multiples
CDNS's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CDNS is cheaper than 61.92% of the companies in the same industry.
CDNS's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 60.38 | ||
| EV/EBITDA | 53.55 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
CDNS has an outstanding profitability rating, which may justify a higher PE ratio.
CDNS's earnings are expected to grow with 15.94% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.86
PEG (5Y)2.35
EPS Next 2Y16.39%
EPS Next 3Y15.94%
5. Dividend
5.1 Amount
No dividends for CDNS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
351.26
+2.74 (+0.79%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners90.17%
Inst Owner Change-3.17%
Ins Owners0.26%
Ins Owner Change-0.75%
Market Cap95.71B
Analysts78.62
Price Target375.97 (7.03%)
Short Float %1.41%
Short Ratio2.09
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)3.64%
Min EPS beat(2)3.21%
Max EPS beat(2)4.06%
EPS beat(4)4
Avg EPS beat(4)5.03%
Min EPS beat(4)1.28%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)3.59%
EPS beat(12)12
Avg EPS beat(12)3.36%
EPS beat(16)16
Avg EPS beat(16)4.59%
Revenue beat(2)1
Avg Revenue beat(2)-0.84%
Min Revenue beat(2)-1.71%
Max Revenue beat(2)0.03%
Revenue beat(4)2
Avg Revenue beat(4)-0.51%
Min Revenue beat(4)-1.71%
Max Revenue beat(4)0.87%
Revenue beat(8)3
Avg Revenue beat(8)-0.58%
Revenue beat(12)4
Avg Revenue beat(12)-0.49%
Revenue beat(16)7
Avg Revenue beat(16)-0.18%
PT rev (1m)1.06%
PT rev (3m)14.14%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.65%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)1.97%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 52.12 | ||
| Fwd PE | 43.43 | ||
| P/S | 18.81 | ||
| P/FCF | 60.38 | ||
| P/OCF | 55.78 | ||
| P/B | 19.12 | ||
| P/tB | 53.54 | ||
| EV/EBITDA | 53.55 |
EPS(TTM)6.74
EY1.92%
EPS(NY)8.09
Fwd EY2.3%
FCF(TTM)5.82
FCFY1.66%
OCF(TTM)6.3
OCFY1.79%
SpS18.68
BVpS18.37
TBVpS6.56
PEG (NY)2.86
PEG (5Y)2.35
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.64% | ||
| ROE | 20.21% | ||
| ROCE | 19.53% | ||
| ROIC | 15.31% | ||
| ROICexc | 23.64% | ||
| ROICexgc | 62.26% | ||
| OM | 30.74% | ||
| PM (TTM) | 19.88% | ||
| GM | 85.57% | ||
| FCFM | 31.15% |
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 | 0.49 | ||
| Debt/FCF | 1.56 | ||
| Debt/EBITDA | 1.39 | ||
| Cap/Depr | 60.51% | ||
| Cap/Sales | 2.57% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 96.36% | ||
| Profit Quality | 156.64% | ||
| Current Ratio | 2.82 | ||
| Quick Ratio | 2.67 | ||
| Altman-Z | N/A |
F-Score5
WACC11.3%
ROIC/WACC1.36
Cap/Depr(3y)78.99%
Cap/Depr(5y)69.81%
Cap/Sales(3y)3.02%
Cap/Sales(5y)2.97%
Profit Quality(3y)119.11%
Profit Quality(5y)128.61%
High Growth Momentum
Growth
EPS 1Y (TTM)32.42%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%28.91%
EPS Next Y18.22%
EPS Next 2Y16.39%
EPS Next 3Y15.94%
EPS Next 5Y12.88%
Revenue 1Y (TTM)22.29%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%20.25%
Revenue Next Year13.22%
Revenue Next 2Y12.68%
Revenue Next 3Y12.62%
Revenue Next 5Y11.65%
EBIT growth 1Y30.05%
EBIT growth 3Y21.31%
EBIT growth 5Y22.65%
EBIT Next Year22.62%
EBIT Next 3Y17.75%
EBIT Next 5Y13.76%
FCF growth 1Y39.78%
FCF growth 3Y2.64%
FCF growth 5Y11.29%
OCF growth 1Y35.98%
OCF growth 3Y4.62%
OCF growth 5Y11.56%