Cadence Design Systems (NasdaqGS:CDNS) - Share price, News & Analysis

CDNS fundamental analysis
Snowflake Score
Valuation	0/6
Future Growth	4/6
Past Performance	4/6
Financial Health	6/6
Dividends	0/6

CDNS Stock Overview

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide.

Rewards

Earnings are forecast to grow 15.68% per year

Earnings have grown 26.8% per year over the past 5 years

Risk Analysis

Significant insider selling over the past 3 months

Cadence Design Systems Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Cadence Design Systems
Historical stock prices
Current Share Price	US$157.62
52 Week High	US$192.70
52 Week Low	US$132.32
Beta	1.13
1 Month Change	8.66%
3 Month Change	-0.77%
1 Year Change	16.96%
3 Year Change	122.60%
5 Year Change	370.65%
Change since IPO	3,446.45%

Shareholder Returns

	CDNS	US Software	US Market
7D	10.2%	9.9%	6.6%
1Y	17.0%	-18.1%	-18.5%

Return vs Industry: CDNS exceeded the US Software industry which returned -21.3% over the past year.

Return vs Market: CDNS exceeded the US Market which returned -20.5% over the past year.

Price Volatility

Is CDNS's price volatile compared to industry and market?
CDNS volatility
CDNS Average Weekly Movement	6.6%
Software Industry Average Movement	11.1%
Market Average Movement	8.0%
10% most volatile stocks in US Market	16.6%
10% least volatile stocks in US Market	3.1%

Stable Share Price: CDNS is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: CDNS's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1987	9,300	Anirudh Devgan	https://www.cadence.com

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification.

Cadence Design Systems Fundamentals Summary

How do Cadence Design Systems's earnings and revenue compare to its market cap?
CDNS fundamental statistics
Market Cap	US$41.66b
Earnings (TTM)	US$744.12m
Revenue (TTM)	US$3.15b

58.4x

P/E Ratio

13.8x

P/S Ratio

Is CDNS overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
CDNS income statement (TTM)
Revenue	US$3.15b
Cost of Revenue	US$320.88m
Gross Profit	US$2.83b
Other Expenses	US$2.09b
Earnings	US$744.12m

Last Reported Earnings

Apr 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	2.70
Gross Margin	89.83%
Net Profit Margin	23.59%
Debt/Equity Ratio	12.6%

How did CDNS perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is CDNS undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

0/6

Valuation Score 0/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CDNS?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for CDNS. This is calculated by dividing CDNS's market cap by their current preferred multiple.
What is CDNS's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$41.66b

CDNS key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	13x
Enterprise Value/EBITDA	39.5x
PEG Ratio	3.7x

Price to Earnings Ratio vs Peers

How does CDNS's PE Ratio compare to its peers?

CDNS PE Ratio vs Peers

The above table shows the PE ratio for CDNS vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	56.6x

Forward PE

Price-To-Earnings vs Peers: CDNS is expensive based on its Price-To-Earnings Ratio (58.4x) compared to the peer average (56.6x).

Price to Earnings Ratio vs Industry

How does CDNS's PE Ratio compare vs other companies in the U.S. Software Industry?

Price-To-Earnings vs Industry: CDNS is expensive based on its Price-To-Earnings Ratio (58.4x) compared to the US Software industry average (38.2x)

Price to Earnings Ratio vs Fair Ratio

What is CDNS's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CDNS PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	58.4x
Fair PE Ratio	38.4x

Price-To-Earnings vs Fair Ratio: CDNS is expensive based on its Price-To-Earnings Ratio (58.4x) compared to the estimated Fair Price-To-Earnings Ratio (38.4x).

Share Price vs Fair Value

What is the Fair Price of CDNS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CDNS ($157.62) is trading above our estimate of fair value ($140.14)

Significantly Below Fair Value: CDNS is trading above our estimate of fair value.

Price to Earnings Growth Ratio

PEG Ratio: CDNS is poor value based on its PEG Ratio (3.7x)

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Future Growth

How is Cadence Design Systems forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

15.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: CDNS's forecast earnings growth (15.7% per year) is above the savings rate (1.9%).

Earnings vs Market: CDNS's earnings (15.7% per year) are forecast to grow faster than the US market (13.9% per year).

High Growth Earnings: CDNS's earnings are forecast to grow, but not significantly.

Revenue vs Market: CDNS's revenue (9.9% per year) is forecast to grow faster than the US market (8.3% per year).

High Growth Revenue: CDNS's revenue (9.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: CDNS's Return on Equity is forecast to be high in 3 years time (36.4%)

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Past Performance

How has Cadence Design Systems performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

26.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CDNS has high quality earnings.

Growing Profit Margin: CDNS's current net profit margins (23.6%) are higher than last year (23.3%).

Past Earnings Growth Analysis

Earnings Trend: CDNS's earnings have grown significantly by 26.8% per year over the past 5 years.

Accelerating Growth: CDNS's earnings growth over the past year (13.9%) is below its 5-year average (26.8% per year).

Earnings vs Industry: CDNS earnings growth over the past year (13.9%) underperformed the Software industry 27.1%.

Return on Equity

High ROE: CDNS's Return on Equity (27%) is considered high.

Discover strong past performing companies

Financial Health

How is Cadence Design Systems's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: CDNS's short term assets ($1.7B) exceed its short term liabilities ($960.8M).

Long Term Liabilities: CDNS's short term assets ($1.7B) exceed its long term liabilities ($674.1M).

Debt to Equity History and Analysis

Debt Level: CDNS has more cash than its total debt.

Reducing Debt: CDNS's debt to equity ratio has reduced from 82.2% to 12.6% over the past 5 years.

Debt Coverage: CDNS's debt is well covered by operating cash flow (353.4%).

Interest Coverage: CDNS's interest payments on its debt are well covered by EBIT (62.7x coverage).

Balance Sheet

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Dividend

What is Cadence Design Systems's current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate CDNS's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate CDNS's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if CDNS's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if CDNS's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as CDNS has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

4.5yrs

Average management tenure

CEO

Anirudh Devgan (51 yo)

4.58yrs

Tenure

US$21,735,794

Compensation

Dr. Anirudh Devgan, Ph D., has been President of Cadence Design Systems, Inc. since November 16, 2017 and has been its Director since August 01, 2021. He has been Chief Executive Officer at Cadence Design...

CEO Compensation Analysis

Compensation vs Market: Anirudh's total compensation ($USD21.74M) is above average for companies of similar size in the US market ($USD13.59M).

Compensation vs Earnings: Anirudh's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: CDNS's management team is considered experienced (4.5 years average tenure).

Board Members

Experienced Board: CDNS's board of directors are considered experienced (7.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: CDNS insiders have only sold shares in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/24 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/04/02
Annual Earnings	2022/01/01