NasdaqGS:CDNS

Stock Analysis Report

Executive Summary

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

Rewards

PE ratio (43.4x) is below the Software industry average (44.9x)

Earnings are forecast to grow 7.93% per year

Earnings grew by 83.8% over the past year

Risk Analysis

No risks detected for CDNS from our risk checks.


Snowflake Analysis

Outstanding track record with flawless balance sheet.


Similar Companies

Share Price & News

How has Cadence Design Systems's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CDNS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.1%

CDNS

0.8%

US Software

0.6%

US Market


1 Year Return

57.1%

CDNS

33.7%

US Software

20.8%

US Market

Return vs Industry: CDNS exceeded the US Software industry which returned 33.7% over the past year.

Return vs Market: CDNS exceeded the US Market which returned 20.8% over the past year.


Shareholder returns

CDNSIndustryMarket
7 Day1.1%0.8%0.6%
30 Day1.1%1.6%2.5%
90 Day3.6%5.8%4.9%
1 Year57.1%57.1%35.7%33.7%23.5%20.8%
3 Year165.9%165.9%130.8%121.5%46.5%37.0%
5 Year257.8%257.8%171.6%152.3%64.6%46.5%

Price Volatility Vs. Market

How volatile is Cadence Design Systems's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Cadence Design Systems undervalued compared to its fair value and its price relative to the market?

43.41x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: CDNS ($67.92) is trading above our estimate of fair value ($41.46)

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


Price To Earnings Ratio

PE vs Industry: CDNS is good value based on its PE Ratio (43.4x) compared to the Software industry average (44.9x).

PE vs Market: CDNS is poor value based on its PE Ratio (43.4x) compared to the US market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: CDNS is poor value based on its PEG Ratio (5.5x)


Price to Book Ratio

PB vs Industry: CDNS is overvalued based on its PB Ratio (12.9x) compared to the US Software industry average (5.6x).


Next Steps

Future Growth

How is Cadence Design Systems forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

7.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CDNS's forecast earnings growth (7.9% per year) is above the savings rate (1.7%).

Earnings vs Market: CDNS's earnings (7.9% per year) are forecast to grow slower than the US market (14.4% per year).

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

Revenue vs Market: CDNS's revenue (6.4% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: CDNS's revenue (6.4% 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 (28.7%)


Next Steps

Past Performance

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

16.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CDNS has high quality earnings.

Growing Profit Margin: CDNS's current net profit margins (18.5%) are higher than last year (11.2%).


Past Earnings Growth Analysis

Earnings Trend: CDNS's earnings have grown by 16% per year over the past 5 years.

Accelerating Growth: CDNS's earnings growth over the past year (83.8%) exceeds its 5-year average (16% per year).

Earnings vs Industry: CDNS earnings growth over the past year (83.8%) exceeded the Software industry 15.8%.


Return on Equity

High ROE: CDNS's Return on Equity (28.9%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Cadence Design Systems's financial position?


Financial Position Analysis

Short Term Liabilities: CDNS's short term assets ($1.0B) exceed its short term liabilities ($619.0M).

Long Term Liabilities: CDNS's short term assets ($1.0B) exceed its long term liabilities ($563.0M).


Debt to Equity History and Analysis

Debt Level: CDNS's debt to equity ratio (23.4%) is considered satisfactory.

Reducing Debt: CDNS's debt to equity ratio has reduced from 26.8% to 23.4% over the past 5 years.

Debt Coverage: CDNS's debt is well covered by operating cash flow (203%).

Interest Coverage: CDNS's interest payments on its debt are well covered by EBIT (46.9x coverage).


Balance Sheet

Inventory Level: CDNS has a low level of unsold assets or inventory.

Debt Coverage by Assets: CDNS's debt is covered by short term assets (assets are 3x debt).


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.4%forecastin3Years0%

Current dividend yield vs market & industry

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

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


Current Payout to Shareholders

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


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of CDNS's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Cadence Design Systems's salary, the management and board of directors tenure and is there insider trading?

7.6yrs

Average management tenure


CEO

Lip-Bu Tan (59yo)

10.9yrs

Tenure

US$7,556,368

Compensation

Mr. Lip-Bu Tan is a Co-Founder, Partner, Managing Director, and Chairman of Walden Riverwood Ventures. Mr. Tan serves as Director of Green Hills Software, Inc. and Managing Partner of WRVI Capital. He serv ...


CEO Compensation Analysis

Compensation vs Market: Lip-Bu's total compensation ($USD7.56M) is below average for companies of similar size in the US market ($USD10.94M).

Compensation vs Earnings: Lip-Bu's compensation has been consistent with company performance over the past year.


Management Age and Tenure

7.6yrs

Average Tenure

52yo

Average Age

Experienced Management: CDNS's management team is seasoned and experienced (7.6 years average tenure).


Board Age and Tenure

8.8yrs

Average Tenure

64yo

Average Age

Experienced Board: CDNS's board of directors are considered experienced (8.8 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$88,60813 Aug 19
James Cowie
EntityIndividual
Role
Chief Legal Officer
Senior VP
Shares1,251
Max PriceUS$70.83
SellUS$2,274,61828 Mar 19
Aneel Zaman
EntityIndividual
Role
Chief Operating Officer
Senior Vice President of Worldwide Field Operations
Shares36,824
Max PriceUS$61.77
SellUS$294,46506 Mar 19
Chin-Chi Teng
EntityIndividual
Shares5,084
Max PriceUS$57.92
SellUS$2,018,10005 Mar 19
Susan Bostrom
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares35,000
Max PriceUS$57.66

Ownership Breakdown

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


Management Team

  • Lip-Bu Tan (59yo)

    CEO & Director

    • Tenure: 10.9yrs
    • Compensation: US$7.56m
  • Surendra Mandava (60yo)

    Senior VP of Research & Development and GM of IP Group

    • Tenure: 2.9yrs
    • Compensation: US$2.46m
  • Ariel Sella

    Co-Founder

    • Tenure: 0yrs
  • Jim Cowie (54yo)

    Senior VP

    • Tenure: 11.7yrs
    • Compensation: US$964.06k
  • James Haddad

    Corporate VP of Corporate Finance & Treasurer

    • Tenure: 13.7yrs
  • Alan Lindstrom

    Senior Group Director of Investor Relations

    • Tenure: 0yrs
  • Anirudh Devgan (49yo)

    President

    • Tenure: 2.1yrs
    • Compensation: US$4.36m
  • Neil Zaman (50yo)

    Senior Vice President of Worldwide Field Operations

    • Tenure: 4.3yrs
    • Compensation: US$2.69m
  • Neil Kole

    Senior VP & Chief Information Officer

    • Tenure: 3.6yrs
  • John Wall (48yo)

    Senior VP & CFO

    • Tenure: 12.2yrs
    • Compensation: US$2.05m

Board Members

  • Lip-Bu Tan (59yo)

    CEO & Director

    • Tenure: 10.9yrs
    • Compensation: US$7.56m
  • Young Sohn (63yo)

    Director

    • Tenure: 6.8yrs
    • Compensation: US$319.00k
  • Maggie Wilderotter (64yo)

    Independent Director

    • Tenure: 2.5yrs
    • Compensation: US$292.00k
  • Roger Siboni (65yo)

    Independent Director

    • Tenure: 20.9yrs
    • Compensation: US$355.90k
  • Mark Adams (55yo)

    Independent Director

    • Tenure: 4.8yrs
    • Compensation: US$299.00k
  • James Plummer (74yo)

    Independent Director

    • Tenure: 8.2yrs
    • Compensation: US$320.00k
  • Alberto Sangiovanni-Vincentelli (71yo)

    Independent Director

    • Tenure: 27.9yrs
    • Compensation: US$303.18k
  • John Shoven (72yo)

    Independent Chairman of the Board

    • Tenure: 14.9yrs
    • Compensation: US$463.43k
  • Sue Bostrom (59yo)

    Independent Director

    • Tenure: 8.8yrs
    • Compensation: US$338.00k

Company Information

Cadence Design Systems, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Cadence Design Systems, Inc.
  • Ticker: CDNS
  • Exchange: NasdaqGS
  • Founded: 1988
  • Industry: Application Software
  • Sector: Software
  • Market Cap: US$18.766b
  • Shares outstanding: 280.59m
  • Website: https://www.cadence.com

Number of Employees


Location

  • Cadence Design Systems, Inc.
  • 2655 Seely Avenue
  • Building 5
  • San Jose
  • California
  • 95134
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CDNSNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDSep 1990
CDSDB (Deutsche Boerse AG)YesCommon StockDEEURSep 1990
0HS2LSE (London Stock Exchange)YesCommon StockGBUSDSep 1990
CDNS *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNSep 1990

Biography

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation an ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/13 23:34
End of Day Share Price2019/12/13 00:00
Earnings2019/09/28
Annual Earnings2018/12/29


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.