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CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis

NASDAQ:CDNS - Nasdaq - US1273871087 - Common Stock - Currency: USD

297.74  -4.48 (-1.48%)

Premarket: 300.5 +2.76 (+0.93%)

Fundamental Rating

6

Overall CDNS gets a fundamental rating of 6 out of 10. We evaluated CDNS against 281 industry peers in the Software industry. While CDNS has a great profitability rating, there are some minor concerns on its financial health. CDNS is valued quite expensively, but it does show have an excellent growth rating. With these ratings, CDNS could be worth investigating further for growth investing!.


Dividend Valuation Growth Profitability Health

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9

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.
CDNS had a positive operating cash flow in each of the past 5 years.
CDNS Yearly Net Income VS EBIT VS OCF VS FCFCDNS Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 200M 400M 600M 800M 1B

1.2 Ratios

CDNS has a Return On Assets of 12.00%. This is amongst the best in the industry. CDNS outperforms 87.19% of its industry peers.
With an excellent Return On Equity value of 22.64%, CDNS belongs to the best of the industry, outperforming 87.54% of the companies in the same industry.
With an excellent Return On Invested Capital value of 15.16%, CDNS belongs to the best of the industry, outperforming 91.81% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for CDNS is significantly above the industry average of 12.03%.
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 RankSector 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%
CDNS Yearly ROA, ROE, ROICCDNS Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10 20 30 40

1.3 Margins

CDNS has a better Profit Margin (22.19%) than 88.97% of its industry peers.
CDNS's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 30.60%, CDNS belongs to the top of the industry, outperforming 95.37% of the companies in the same industry.
In the last couple of years the Operating Margin of CDNS has grown nicely.
CDNS has a better Gross Margin (85.86%) than 94.31% 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 RankSector 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%
CDNS Yearly Profit, Operating, Gross MarginsCDNS Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60 80

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6

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.
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.
CDNS Yearly Shares OutstandingCDNS Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100M 200M 300M
CDNS Yearly Total Debt VS Total AssetsCDNS Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B

2.2 Solvency

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.
CDNS has a better Debt to FCF ratio (1.80) than 68.68% of its industry peers.
A Debt/Equity ratio of 0.52 indicates that CDNS is somewhat dependend on debt financing.
CDNS's Debt to Equity ratio of 0.52 is on the low side compared to the rest of the industry. CDNS is outperformed by 65.48% of its industry peers.
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 RankSector Rank
Debt/Equity 0.52
Debt/FCF 1.8
Altman-Z N/A
ROIC/WACC1.46
WACC10.38%
CDNS Yearly LT Debt VS Equity VS FCFCDNS Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B

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.
CDNS has a Current ratio of 3.07. This is in the better half of the industry: CDNS outperforms 74.02% of its industry peers.
A Quick Ratio of 2.90 indicates that CDNS has no problem at all paying its short term obligations.
CDNS's Quick ratio of 2.90 is fine compared to the rest of the industry. CDNS outperforms 73.31% of its industry peers.
Industry RankSector Rank
Current Ratio 3.07
Quick Ratio 2.9
CDNS Yearly Current Assets VS Current LiabilitesCDNS Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B

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7

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.
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 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

CDNS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 12.08% yearly.
The Revenue is expected to grow by 11.01% on average over the next years. This is quite good.
EPS Next Y14.69%
EPS Next 2Y14.82%
EPS Next 3Y14.69%
EPS Next 5Y12.08%
Revenue Next Year11.99%
Revenue Next 2Y11.98%
Revenue Next 3Y12.04%
Revenue Next 5Y11.01%

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.
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.
CDNS Yearly Revenue VS EstimatesCDNS Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2B 4B 6B 8B 10B
CDNS Yearly EPS VS EstimatesCDNS Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 5 10 15

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3

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 46.74, the valuation of CDNS can be described as expensive.
CDNS's Price/Earnings ratio is in line with the industry average.
CDNS's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 28.88.
Based on the Price/Forward Earnings ratio of 37.83, the valuation of CDNS can be described as expensive.
CDNS's Price/Forward Earnings ratio is in line with the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.20, CDNS is valued quite expensively.
Industry RankSector Rank
PE 46.74
Fwd PE 37.83
CDNS Price Earnings VS Forward Price EarningsCDNS Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30 40

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, CDNS is valued a bit cheaper than 67.62% of the companies in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as CDNS.
Industry RankSector Rank
P/FCF 59.25
EV/EBITDA 47.82
CDNS Per share dataCDNS EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 5 10 15

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 14.69% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.18
PEG (5Y)2.1
EPS Next 2Y14.82%
EPS Next 3Y14.69%

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0

5. Dividend

5.1 Amount

No dividends for CDNS!.
Industry RankSector Rank
Dividend Yield N/A

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CADENCE DESIGN SYS INC

NASDAQ:CDNS (4/30/2025, 8:00:02 PM)

Premarket: 300.5 +2.76 (+0.93%)

297.74

-4.48 (-1.48%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)04-28 2025-04-28/amc
Earnings (Next)07-21 2025-07-21/amc
Inst Owners91.7%
Inst Owner Change0.31%
Ins Owners0.16%
Ins Owner Change9.09%
Market Cap81.67B
Analysts80
Price Target317.1 (6.5%)
Short Float %1.78%
Short Ratio1.87
Dividend
Industry RankSector 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)2.19%
Min EPS beat(2)1.28%
Max EPS beat(2)3.11%
EPS beat(4)4
Avg EPS beat(4)4.63%
Min EPS beat(4)1.28%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)3.19%
EPS beat(12)12
Avg EPS beat(12)3.85%
EPS beat(16)16
Avg EPS beat(16)4.99%
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)-3.34%
PT rev (3m)-3.06%
EPS NQ rev (1m)-0.05%
EPS NQ rev (3m)-5.22%
EPS NY rev (1m)-0.16%
EPS NY rev (3m)-2.04%
Revenue NQ rev (1m)-0.08%
Revenue NQ rev (3m)-0.86%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)-1.3%
Valuation
Industry RankSector Rank
PE 46.74
Fwd PE 37.83
P/S 16.76
P/FCF 59.25
P/OCF 54.65
P/B 17.1
P/tB 46.08
EV/EBITDA 47.82
EPS(TTM)6.37
EY2.14%
EPS(NY)7.87
Fwd EY2.64%
FCF(TTM)5.02
FCFY1.69%
OCF(TTM)5.45
OCFY1.83%
SpS17.77
BVpS17.41
TBVpS6.46
PEG (NY)3.18
PEG (5Y)2.1
Profitability
Industry RankSector 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 RankSector Rank
Debt/Equity 0.52
Debt/FCF 1.8
Debt/EBITDA 1.46
Cap/Depr 55.16%
Cap/Sales 2.38%
Interest Coverage 250
Cash Conversion 87.81%
Profit Quality 127.46%
Current Ratio 3.07
Quick Ratio 2.9
Altman-Z N/A
F-Score5
WACC10.38%
ROIC/WACC1.46
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 Y14.69%
EPS Next 2Y14.82%
EPS Next 3Y14.69%
EPS Next 5Y12.08%
Revenue 1Y (TTM)19.55%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%23.12%
Revenue Next Year11.99%
Revenue Next 2Y11.98%
Revenue Next 3Y12.04%
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%