CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
NASDAQ:CDNS - Nasdaq - US1273871087 - Common Stock - Currency: USD
Taking everything into account, CDNS scores 7 out of 10 in our fundamental rating. CDNS was compared to 281 industry peers in the Software industry. CDNS scores excellent points on both the profitability and health parts. This is a solid base for a good stock. CDNS is valued quite expensive, but it does show an excellent growth. With these ratings, CDNS could be worth investigating further 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.
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
CDNS has a better Return On Assets (12.00%) than 89.32% of its industry peers.
With an excellent Return On Equity value of 22.64%, CDNS belongs to the best of the industry, outperforming 87.90% of the companies in the same industry.
CDNS has a Return On Invested Capital of 15.16%. This is amongst the best in the industry. CDNS outperforms 92.17% of its industry peers.
CDNS had an Average Return On Invested Capital over the past 3 years of 20.16%. This is significantly above the industry average of 12.19%.
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 has a Profit Margin of 22.19%. This is amongst the best in the industry. CDNS outperforms 90.75% of its industry peers.
In the last couple of years the Profit Margin of CDNS has declined.
The Operating Margin of CDNS (30.60%) is better than 94.66% of its industry peers.
CDNS's Operating Margin has improved in the last couple of years.
CDNS has a Gross Margin of 85.86%. This is amongst the best in the industry. CDNS outperforms 94.66% of its industry peers.
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CDNS is creating some 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
An Altman-Z score of 15.32 indicates that CDNS is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 15.32, CDNS belongs to the top of the industry, outperforming 90.39% 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.
CDNS has a Debt to FCF ratio of 1.80. This is in the better half of the industry: CDNS outperforms 68.33% of its industry peers.
CDNS has a Debt/Equity ratio of 0.52. This is a neutral value indicating CDNS is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.52, CDNS is not doing good in the industry: 65.84% of the companies in the same industry are doing better.
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 Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 1.8 | ||
| Altman-Z | 15.32 |
ROIC/WACC1.33
WACC11.43%
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.
The Current ratio of CDNS (3.07) is better than 78.29% of its industry peers.
A Quick Ratio of 2.90 indicates that CDNS has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 2.90, CDNS is in the better half of the industry, outperforming 77.22% of the companies in the same industry.
| 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 32.42%, 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.
The Revenue has grown by 13.48% 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 14.72% yearly.
EPS 1Y (TTM)32.42%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%28.91%
Revenue 1Y (TTM)13.48%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%20.25%
3.2 Future
The Earnings Per Share is expected to grow by 10.75% on average over the next years. This is quite good.
The Revenue is expected to grow by 9.79% on average over the next years. This is quite good.
EPS Next Y16.01%
EPS Next 2Y15.27%
EPS Next 3Y15.05%
EPS Next 5Y10.75%
Revenue Next Year12.12%
Revenue Next 2Y12.12%
Revenue Next 3Y12.02%
Revenue Next 5Y9.79%
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 Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
CDNS is valuated quite expensively with a Price/Earnings ratio of 54.34.
Compared to the rest of the industry, the Price/Earnings ratio of CDNS indicates a somewhat cheap valuation: CDNS is cheaper than 60.50% of the companies listed in the same industry.
CDNS's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 27.91.
With a Price/Forward Earnings ratio of 46.17, CDNS can be considered very expensive at the moment.
CDNS's Price/Forward Earnings ratio is in line with the industry average.
CDNS is valuated rather expensively when we compare the Price/Forward Earnings ratio to 37.11, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.34 | ||
| Fwd PE | 46.17 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CDNS indicates a somewhat cheap valuation: CDNS is cheaper than 64.06% of the companies listed 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 | 72.55 | ||
| EV/EBITDA | 53.38 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
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 15.05% in the coming years.
PEG (NY)3.4
PEG (5Y)2.45
EPS Next 2Y15.27%
EPS Next 3Y15.05%
5. Dividend
5.1 Amount
CDNS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
366.26
+32.5 (+9.74%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.67%
Inst Owner Change-0.06%
Ins Owners0.27%
Ins Owner Change9.19%
Market Cap100.00B
Analysts79.29
Price Target336.53 (-8.12%)
Short Float %1.12%
Short Ratio1.64
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)2.17%
PT rev (3m)6.13%
EPS NQ rev (1m)-1.24%
EPS NQ rev (3m)-1.47%
EPS NY rev (1m)0.06%
EPS NY rev (3m)1.15%
Revenue NQ rev (1m)-0.54%
Revenue NQ rev (3m)-0.08%
Revenue NY rev (1m)0.34%
Revenue NY rev (3m)0.25%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.34 | ||
| Fwd PE | 46.17 | ||
| P/S | 20.52 | ||
| P/FCF | 72.55 | ||
| P/OCF | 66.92 | ||
| P/B | 20.94 | ||
| P/tB | 56.43 | ||
| EV/EBITDA | 53.38 |
EPS(TTM)6.74
EY1.84%
EPS(NY)7.93
Fwd EY2.17%
FCF(TTM)5.05
FCFY1.38%
OCF(TTM)5.47
OCFY1.49%
SpS17.85
BVpS17.49
TBVpS6.49
PEG (NY)3.4
PEG (5Y)2.45
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 | 15.32 |
F-Score5
WACC11.43%
ROIC/WACC1.33
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)32.42%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%28.91%
EPS Next Y16.01%
EPS Next 2Y15.27%
EPS Next 3Y15.05%
EPS Next 5Y10.75%
Revenue 1Y (TTM)13.48%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%20.25%
Revenue Next Year12.12%
Revenue Next 2Y12.12%
Revenue Next 3Y12.02%
Revenue Next 5Y9.79%
EBIT growth 1Y24.2%
EBIT growth 3Y21.31%
EBIT growth 5Y22.65%
EBIT Next Year24.07%
EBIT Next 3Y16.97%
EBIT Next 5Y9.92%
FCF growth 1Y32.44%
FCF growth 3Y2.63%
FCF growth 5Y11.29%
OCF growth 1Y27.43%
OCF growth 3Y4.61%
OCF growth 5Y11.56%