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CDNS

Cadence Design Systems NasdaqGS:CDNS Stock Report

Last Price

US$151.64

Market Cap

US$41.8b

7D

1.0%

1Y

9.4%

Updated

05 Jul, 2022

Data

Company Financials +
CDNS fundamental analysis
Snowflake Score
Valuation1/6
Future Growth3/6
Past Performance4/6
Financial Health6/6
Dividends0/6

CDNS Stock Overview

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

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 PriceUS$151.64
52 Week HighUS$192.70
52 Week LowUS$132.32
Beta1.13
1 Month Change-4.36%
3 Month Change-6.31%
1 Year Change9.35%
3 Year Change103.57%
5 Year Change344.04%
Change since IPO3,311.90%

Recent News & Updates

Jun 30

Cadence Design Systems: A Long-Term Revenue Growth Play

Cadence’s long-term revenue will grow at mid single digits driven by highly advanced chip-designing products. The company’s main growth driver is its electronic design automation business. Long-term investors can buy the company’s shares on significant pullbacks. Cadence Design Systems, Inc. (CDNS) is an impressive growth story in the semiconductor designing market. Its revenue is expected to grow at a CAGR of around 6% in the next five years, driven by its highly advanced chip-designing products. Semiconductor designing activity is expected to remain modestly strong in the long term, which will keep Cadence's revenue growth momentum strong. Long-term investors can buy the company's shares during pullbacks. Cadence offers its software, hardware, services and reusable IC design blocks to its electronic systems customers and semiconductor customers. The company's technology is used by its electronic systems customers to develop ICs (integrated circuits) and PCBs (printed circuit boards). Its semiconductor customers develop memory chips, systems-on-chips (SoCs) and analog chips. Growth Drivers EDA Business Cadence's primary growth driver is its EDA (electronic design automation) business. The company's EDA tools help engineers build different types of ICs and SoCs. According to a report: The electronic design automation market revenue was accounted for USD 11.5 billion in 2020 and is projected to reach USD 18.1 billion by 2026, at a CAGR of 7.7% during the forecast period. The increasing demand for complex integrated circuits ("ICs") and technologically advanced consumer electronics along with growing adoption of connected devices are the major driving factors for the growth of the electronic design automation market. Cadence's EDA business is fueled by its customers' investments in new products and new designs of existing products. The most promising new opportunities for the company exist in the areas of augmented reality ("AR"), virtual reality ("VR"), industrial internet of things ("IIoT"), hyperscale computing, artificial intelligence ("AI"), machine learning ("ML"), and edge computing. Existing opportunities belong to the areas of smartphones and networking equipment, communications (including 5G networks), automotive, aerospace and defense, and industrial and healthcare subsystems. Cadence's EDA tools are designed to offer its customers a competitive edge in developing ICs and SoCs. The products offer optimized performance for customers' products, reduced power consumption, and shortening of time to market. As a result, the products enjoy rising demand in the marketplace, and perform well in competitive environment. The company's EDA tools will drive long-term revenue growth for the company. Competition Cadence belongs to a highly competitive industry. The company's competitors include Synopsys (SNPS), Keysight Technologies (KEYS) and Analog Devices (ADI). Cadence competes on the basis of product quality, customer service, and price. The company's primary competitive advantage lies in the fact that its products offer its customers various differentiation, capabilities and benefits in their businesses. Rapid pace of innovation is bringing new opportunities for Cadence's products, such as addressing key challenges associated with electronic product development, like power consumption, product performance, chip area and cost. The company is applying machine learning within its products to enhance quality of results ("QoR"), productivity, and performance of its products. These are the reasons the company's products will drive long-term revenue growth for the company. The company's other competitive advantage is that it offers its IP (intellectual property) assets in the form of software, hardware, services, and reusable IC design blocks to its customers for manufacturing their ICs. In this way, the company's customers accelerate their product development processes. As a result, the company's IP assets enjoy strong demand in the market. First Quarter 2022 Financial Results Cadence delivered first quarter 2022 revenue of $902 million, compared to revenue of $736 million in the year-ago period. This is a year-over-year increase of 22.55%. The company's non-GAAP net income was $324 million, which translates into an EPS of $1.17, which was a year-over-year increase of 41%. The company delivered an excellent result for the first quarter of 2022. Top-line expanded driven by broad-based strength across the company's diverse product portfolio. Bottom-line expanded driven by the company's clients' robust design activity, and accelerating growth in the company's core and new systems businesses. I expect the company will soon start offering dividends resulting from strong and consistent bottom-line expansion. Bottom-line will grow due to rapidly expanding customer base of the company driven by its Intelligent System Design strategy which aligns well with the growing market of electronic product development. An explosion of data is being created driven by generational trends in the fields of hyperscale computing, 5G communications, autonomous driving and AI/ML. These trends are driving the demand for next-generation computing, connectivity, storage and data analytics solutions, which in turn are fueling solid and consistent design activity. I expect these trends will continue to remain active over the next five years, which will drive Cadence's long-term revenue growth. Valuation The company's peer group companies include Synopsys, Keysight Technologies, Analog Devices, Microchip Technology (MCHP), and Power Integrations (POWI). CDNS SNPS KEYS ADI MCHP POWI Non-GAAP (FY1) P/E 38.49x 35.80x 19.44x 15.88x 10.62x 19.65x TTM Price/Sales 13.07x 9.84x 4.95x 7.17x 4.70x 6.37x TTM Price/Cash Flow 33.86x 27.57x 21.76x 20.98x 11.32x 17.78x

Jun 28
Does Cadence Design Systems (NASDAQ:CDNS) Have A Healthy Balance Sheet?

Does Cadence Design Systems (NASDAQ:CDNS) Have A Healthy Balance Sheet?

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Shareholder Returns

CDNSUS SoftwareUS Market
7D1.0%2.9%0.3%
1Y9.4%-22.4%-18.4%

Return vs Industry: CDNS exceeded the US Software industry which returned -23.6% over the past year.

Return vs Market: CDNS exceeded the US Market which returned -19.1% over the past year.

Price Volatility

Is CDNS's price volatile compared to industry and market?
CDNS volatility
CDNS Average Weekly Movement6.8%
Software Industry Average Movement10.9%
Market Average Movement8.1%
10% most volatile stocks in US Market16.8%
10% least volatile stocks in US Market3.3%

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

FoundedEmployeesCEOWebsite
19879,300Anirudh Devganhttps://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 CapUS$41.82b
Earnings (TTM)US$744.12m
Revenue (TTM)US$3.15b

56.2x

P/E Ratio

13.3x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CDNS income statement (TTM)
RevenueUS$3.15b
Cost of RevenueUS$320.88m
Gross ProfitUS$2.83b
Other ExpensesUS$2.09b
EarningsUS$744.12m

Last Reported Earnings

Apr 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)2.70
Gross Margin89.83%
Net Profit Margin23.59%
Debt/Equity Ratio12.6%

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

1/6

Valuation Score 1/6

  • 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.

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/Revenue13x
Enterprise Value/EBITDA39.7x
PEG Ratio3.4x

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.
CompanyPEEstimated GrowthMarket Cap
Peer Average53.6x
SNPS Synopsys
45.9x13.5%US$46.3b
ADSK Autodesk
78.9x32.2%US$38.4b
ROP Roper Technologies
42.5x13.7%US$42.5b
ANSS ANSYS
47.1x13.3%US$21.3b
CDNS Cadence Design Systems
56.2x16.8%US$41.8b

Price-To-Earnings vs Peers: CDNS is expensive based on its Price-To-Earnings Ratio (56.2x) compared to the peer average (53.6x).


Price to Earnings Ratio vs Industry

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

Price-To-Earnings vs Industry: CDNS is expensive based on its Price-To-Earnings Ratio (56.2x) 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 Ratio56.2x
Fair PE Ratio38.9x

Price-To-Earnings vs Fair Ratio: CDNS is expensive based on its Price-To-Earnings Ratio (56.2x) compared to the estimated Fair Price-To-Earnings Ratio (38.9x).


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 ($151.64) is trading below our estimate of fair value ($171.21)

Significantly Below Fair Value: CDNS is trading below fair value, but not by a significant amount.


Price to Earnings Growth Ratio

PEG Ratio: CDNS is poor value based on its PEG Ratio (3.4x)


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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 13 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


16.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CDNS's forecast earnings growth (16.8% per year) is above the savings rate (1.9%).

Earnings vs Market: CDNS's earnings (16.8% per year) are forecast to grow faster than the US market (12.8% per year).

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

Revenue vs Market: CDNS's revenue (9.7% per year) is forecast to grow faster than the US market (7.8% per year).

High Growth Revenue: CDNS's revenue (9.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if CDNS's Return on Equity is forecast to be high in 3 years time


Discover growth companies

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 26.8%.


Return on Equity

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


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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

  • Cash Flow 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.


Discover strong dividend paying companies

Management

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

4.6yrs

Average management tenure


CEO

Anirudh Devgan (52 yo)

4.67yrs

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 ($USD21.74M) is above average for companies of similar size in the US market ($USD13.41M).

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 (4.6 years average tenure).


Board Members

Experienced Board: CDNS's board of directors are considered experienced (7.4 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.


Top Shareholders

Company Information

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


Key Information

  • Name: Cadence Design Systems, Inc.
  • Ticker: CDNS
  • Exchange: NasdaqGS
  • Founded: 1987
  • Industry: Application Software
  • Sector: Software
  • Implied Market Cap: US$41.816b
  • Shares outstanding: 275.76m
  • Website: https://www.cadence.com

Number of Employees


Location

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

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/07/05 00:00
End of Day Share Price2022/07/05 00:00
Earnings2022/04/02
Annual Earnings2022/01/01


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.