CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
USA - NASDAQ:CDNS - US1273871087 - Common Stock
345.69 USD
+8.42 (+2.5%)
We assign a fundamental rating of 6 out of 10 to CDNS. CDNS was compared to 285 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 expensive, but it does show an excellent growth. This makes CDNS very considerable for growth investing!
1. Profitability
1.1 Basic Checks
CDNS had positive earnings in the past year.
CDNS had a positive operating cash flow in the past year.
In the past 5 years CDNS has always been profitable.
In the past 5 years CDNS always reported a positive cash flow from operatings.
1.2 Ratios
CDNS has a better Return On Assets (10.64%) than 86.67% of its industry peers.
Looking at the Return On Equity, with a value of 20.21%, CDNS belongs to the top of the industry, outperforming 86.32% of the companies in the same industry.
The Return On Invested Capital of CDNS (15.31%) is better than 91.93% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CDNS is significantly above the industry average of 11.88%.
The 3 year average ROIC (20.16%) for CDNS is well above the current ROIC(15.31%). The reason for the recent decline needs to be investigated.
| 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
Looking at the Profit Margin, with a value of 19.88%, CDNS belongs to the top of the industry, outperforming 84.21% of the companies in the same industry.
CDNS's Profit Margin has declined in the last couple of years.
The Operating Margin of CDNS (30.74%) is better than 92.98% of its industry peers.
In the last couple of years the Operating Margin of CDNS has grown nicely.
CDNS has a better Gross Margin (85.57%) than 93.33% of its industry peers.
CDNS's Gross Margin has been stable in the last couple of years.
| 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), CDNS is creating value.
CDNS has more shares outstanding than it did 1 year ago.
The number of shares outstanding for CDNS has been reduced compared to 5 years ago.
Compared to 1 year ago, CDNS has a worse debt to assets ratio.
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.
CDNS has a better Debt to FCF ratio (1.56) than 70.88% of its industry peers.
CDNS has a Debt/Equity ratio of 0.49. This is a healthy value indicating a solid balance between debt and equity.
CDNS has a Debt to Equity ratio of 0.49. This is in the lower half of the industry: CDNS underperforms 65.26% 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/WACC1.4
WACC10.92%
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 better Current ratio (2.82) than 76.14% of its industry peers.
A Quick Ratio of 2.67 indicates that CDNS has no problem at all paying its short term obligations.
CDNS has a better Quick ratio (2.67) than 74.39% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.82 | ||
| Quick Ratio | 2.67 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 32.42% over the past year.
The Earnings Per Share has been growing by 22.21% on average over the past years. This is a very strong growth
Looking at the last year, CDNS shows a very strong growth in Revenue. 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
The Earnings Per Share is expected to grow by 12.88% on average over the next years. This is quite good.
CDNS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.65% yearly.
EPS Next Y18.22%
EPS Next 2Y16.39%
EPS Next 3Y15.94%
EPS Next 5Y12.88%
Revenue Next Year13.22%
Revenue Next 2Y12.7%
Revenue Next 3Y12.64%
Revenue Next 5Y11.65%
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.
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
CDNS is valuated quite expensively with a Price/Earnings ratio of 51.29.
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 26.83, CDNS is valued quite expensively.
CDNS is valuated quite expensively with a Price/Forward Earnings ratio of 42.74.
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 22.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 51.29 | ||
| Fwd PE | 42.74 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CDNS is valued a bit cheaper than the industry average as 64.21% of the companies are valued more expensively.
CDNS's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 59.43 | ||
| EV/EBITDA | 51.41 |
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 15.94% in the coming years.
PEG (NY)2.81
PEG (5Y)2.31
EPS Next 2Y16.39%
EPS Next 3Y15.94%
5. Dividend
5.1 Amount
CDNS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
NASDAQ:CDNS (10/24/2025, 10:12:03 AM)
345.69
+8.42 (+2.5%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners90.17%
Inst Owner Change0.11%
Ins Owners0.26%
Ins Owner Change-1.2%
Market Cap94.20B
Revenue(TTM)5.09B
Net Income(TTM)1.01B
Analysts78.62
Price Target375.97 (8.76%)
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)0%
PT rev (3m)11.72%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.63%
EPS NY rev (1m)-0.04%
EPS NY rev (3m)1.91%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.85%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 51.29 | ||
| Fwd PE | 42.74 | ||
| P/S | 18.51 | ||
| P/FCF | 59.43 | ||
| P/OCF | 54.89 | ||
| P/B | 18.81 | ||
| P/tB | 52.69 | ||
| EV/EBITDA | 51.41 |
EPS(TTM)6.74
EY1.95%
EPS(NY)8.09
Fwd EY2.34%
FCF(TTM)5.82
FCFY1.68%
OCF(TTM)6.3
OCFY1.82%
SpS18.68
BVpS18.37
TBVpS6.56
PEG (NY)2.81
PEG (5Y)2.31
Graham Number52.79
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%
ROICexgc growth 3Y4.04%
ROICexgc 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
WACC10.92%
ROIC/WACC1.4
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 2Y12.7%
Revenue Next 3Y12.64%
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%
CADENCE DESIGN SYS INC / CDNS FAQ
What is the ChartMill fundamental rating of CADENCE DESIGN SYS INC (CDNS) stock?
ChartMill assigns a fundamental rating of 6 / 10 to CDNS.
What is the valuation status of CADENCE DESIGN SYS INC (CDNS) stock?
ChartMill assigns a valuation rating of 3 / 10 to CADENCE DESIGN SYS INC (CDNS). This can be considered as Overvalued.
What is the profitability of CDNS stock?
CADENCE DESIGN SYS INC (CDNS) has a profitability rating of 9 / 10.
What is the financial health of CADENCE DESIGN SYS INC (CDNS) stock?
The financial health rating of CADENCE DESIGN SYS INC (CDNS) is 6 / 10.
Can you provide the expected EPS growth for CDNS stock?
The Earnings per Share (EPS) of CADENCE DESIGN SYS INC (CDNS) is expected to grow by 18.22% in the next year.