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 283 industry peers in the Software industry. Both the health and profitability get an excellent rating, making CDNS a very profitable company, without any liquidiy or solvency issues. CDNS is valued quite expensive, but it does show an excellent growth. This makes CDNS very considerable for growth and quality 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.
In the past 5 years CDNS has always been profitable.
Each year in the past 5 years CDNS had a positive operating cash flow.
1.2 Ratios
With an excellent Return On Assets value of 12.00%, CDNS belongs to the best of the industry, outperforming 88.34% of the companies in the same industry.
With an excellent Return On Equity value of 22.64%, CDNS belongs to the best of the industry, outperforming 86.93% of the companies in the same industry.
CDNS has a better Return On Invested Capital (15.16%) than 91.87% 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 12.21%.
The last Return On Invested Capital (15.16%) 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 | 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 89.75% of its industry peers.
In the last couple of years the Profit Margin of CDNS has declined.
CDNS has a better Operating Margin (30.60%) than 94.70% of its industry peers.
In the last couple of years the Operating Margin of CDNS has grown nicely.
With an excellent Gross Margin value of 85.86%, CDNS belongs to the best of the industry, outperforming 94.35% of the companies in the same industry.
CDNS's Gross Margin has been stable in the last couple of years.
| 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
CDNS has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, CDNS has more shares outstanding
CDNS has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, CDNS has a worse debt to assets ratio.
2.2 Solvency
CDNS has an Altman-Z score of 14.87. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 14.87, CDNS belongs to the best of the industry, outperforming 90.46% of the companies in the same industry.
The Debt to FCF ratio of CDNS is 1.80, which is an excellent value as it means it would take CDNS, only 1.80 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 1.80, CDNS is doing good in the industry, outperforming 68.20% of the companies in the same industry.
A Debt/Equity ratio of 0.52 indicates that 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 65.72% of the companies in the same industry.
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 | 0.52 | ||
| Debt/FCF | 1.8 | ||
| Altman-Z | 14.87 |
ROIC/WACC1.39
WACC10.89%
2.3 Liquidity
A Current Ratio of 3.07 indicates that CDNS has no problem at all paying 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 76.33% of the companies in the same industry.
CDNS has a Quick Ratio of 2.90. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
CDNS's Quick ratio of 2.90 is fine compared to the rest of the industry. CDNS outperforms 75.62% of its industry peers.
| 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.
CDNS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 22.21% yearly.
CDNS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 19.55%.
CDNS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.72% yearly.
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
Based on estimates for the next years, CDNS will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.08% on average per year.
The Revenue is expected to grow by 11.01% on average over the next years. This is quite good.
EPS Next Y16.11%
EPS Next 2Y15.21%
EPS Next 3Y14.83%
EPS Next 5Y12.08%
Revenue Next Year12.42%
Revenue Next 2Y12.17%
Revenue Next 3Y12.01%
Revenue Next 5Y11.01%
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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 49.85, the valuation of CDNS can be described as expensive.
CDNS's Price/Earnings is on the same level as the industry average.
CDNS is valuated expensively when we compare the Price/Earnings ratio to 26.03, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 40.08 indicates a quite expensive valuation of CDNS.
CDNS's Price/Forward Earnings is on the same level as the industry average.
CDNS's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.94.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.85 | ||
| Fwd PE | 40.08 |
4.2 Price Multiples
66.43% of the companies in the same industry are more expensive than CDNS, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of CDNS is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 63.2 | ||
| EV/EBITDA | 51.5 |
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 14.83% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.09
PEG (5Y)2.24
EPS Next 2Y15.21%
EPS Next 3Y14.83%
5. Dividend
5.1 Amount
CDNS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
317.55
-3 (-0.94%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.7%
Inst Owner Change0.27%
Ins Owners0.16%
Ins Owner Change9.29%
Market Cap87.11B
Analysts80.71
Price Target323.87 (1.99%)
Short Float %1.71%
Short Ratio2.01
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)-0.38%
PT rev (3m)-2.16%
EPS NQ rev (1m)-0.23%
EPS NQ rev (3m)-3.24%
EPS NY rev (1m)1.24%
EPS NY rev (3m)-0.43%
Revenue NQ rev (1m)0.39%
Revenue NQ rev (3m)-1.38%
Revenue NY rev (1m)0.36%
Revenue NY rev (3m)-0.8%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.85 | ||
| Fwd PE | 40.08 | ||
| P/S | 17.87 | ||
| P/FCF | 63.2 | ||
| P/OCF | 58.29 | ||
| P/B | 18.24 | ||
| P/tB | 49.15 | ||
| EV/EBITDA | 51.5 |
EPS(TTM)6.37
EY2.01%
EPS(NY)7.92
Fwd EY2.5%
FCF(TTM)5.02
FCFY1.58%
OCF(TTM)5.45
OCFY1.72%
SpS17.77
BVpS17.41
TBVpS6.46
PEG (NY)3.09
PEG (5Y)2.24
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 | 14.87 |
F-Score5
WACC10.89%
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 Y16.11%
EPS Next 2Y15.21%
EPS Next 3Y14.83%
EPS Next 5Y12.08%
Revenue 1Y (TTM)19.55%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%23.12%
Revenue Next Year12.42%
Revenue Next 2Y12.17%
Revenue Next 3Y12.01%
Revenue Next 5Y11.01%
EBIT growth 1Y24.2%
EBIT growth 3Y21.31%
EBIT growth 5Y22.65%
EBIT Next Year23.77%
EBIT Next 3Y15.83%
EBIT Next 5Y9.9%
FCF growth 1Y32.44%
FCF growth 3Y2.63%
FCF growth 5Y11.29%
OCF growth 1Y27.43%
OCF growth 3Y4.61%
OCF growth 5Y11.56%