NasdaqGS:CDNS

Stock Analysis Report

Executive Summary

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


Snowflake Analysis

Flawless balance sheet with solid track record.


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

-12.9%

CDNS

-8.9%

US Software

-7.4%

US Market


1 Year Return

19.3%

CDNS

26.1%

US Software

10.5%

US Market

Return vs Industry: CDNS underperformed the US Software industry which returned 26.1% over the past year.

Return vs Market: CDNS exceeded the US Market which returned 10.5% over the past year.


Shareholder returns

CDNSIndustryMarket
7 Day-12.9%-8.9%-7.4%
30 Day-8.2%1.1%-3.6%
90 Day-3.5%6.0%-0.6%
1 Year19.3%19.3%27.4%26.1%12.8%10.5%
3 Year121.5%121.5%130.1%120.4%37.4%28.6%
5 Year271.0%271.0%198.5%177.0%61.3%43.6%

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?

18.91x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: CDNS ($68.45) is trading above our estimate of fair value ($49.24)

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 (18.9x) compared to the Software industry average (46.4x).

PE vs Market: CDNS is poor value based on its PE Ratio (18.9x) compared to the US market (17.2x).


Price to Earnings Growth Ratio

PEG Ratio: CDNS's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: CDNS is overvalued based on its PB Ratio (8.9x) 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 14 analysts?

-20.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CDNS's earnings are forecast to decline over the next 3 years (-20% per year).

Earnings vs Market: CDNS's earnings are forecast to decline over the next 3 years (-20% per year).

High Growth Earnings: CDNS's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CDNS's revenue (6.6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: CDNS's revenue (6.6% 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 (23.4%)


Next Steps

Past Performance

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

24.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CDNS has a high level of non-cash earnings.

Growing Profit Margin: CDNS's current net profit margins (42.3%) are higher than last year (16.1%).


Past Earnings Growth Analysis

Earnings Trend: CDNS's earnings have grown significantly by 24.5% per year over the past 5 years.

Accelerating Growth: CDNS's earnings growth over the past year (187%) exceeds its 5-year average (24.5% per year).

Earnings vs Industry: CDNS earnings growth over the past year (187%) exceeded the Software industry 21%.


Return on Equity

High ROE: CDNS's Return on Equity (47%) is considered outstanding.


Next Steps

Financial Health

How is Cadence Design Systems's financial position?


Financial Position Analysis

Short Term Liabilities: CDNS's short term assets ($1.2B) exceed its short term liabilities ($672.4M).

Long Term Liabilities: CDNS's short term assets ($1.2B) exceed its long term liabilities ($581.9M).


Debt to Equity History and Analysis

Debt Level: CDNS's debt to equity ratio (10.8%) is considered satisfactory.

Reducing Debt: CDNS's debt to equity ratio has reduced from 50.6% to 10.8% over the past 5 years.

Debt Coverage: CDNS's debt is well covered by operating cash flow (320.3%).

Interest Coverage: CDNS's interest payments on its debt are well covered by EBIT (26.6x 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 5.1x debt).


Next Steps

Dividend

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


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 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

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

11.1yrs

Average management tenure


CEO

Lip-Bu Tan (59yo)

11.1yrs

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 ($USD7.56M) is below average for companies of similar size in the US market ($USD10.82M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Lip-Bu Tan
CEO & Director11.1yrsUS$7.56m0.74% $148.4m
Anirudh Devgan
President2.3yrsUS$4.36m0.16% $31.5m
John Wall
Senior VP & CFO12.3yrsUS$2.05m0.076% $15.2m
Aneel Zaman
Senior Vice President of Worldwide Field Operations4.4yrsUS$2.69m0.088% $17.7m
Surendra Mandava
Senior VP of Research & Development and GM of IP Group3.1yrsUS$2.46m0.11% $21.6m
Ariel Sella
Co-Founder0yrsno datano data
James Haddad
Corporate VP of Corporate Finance & Treasurer13.8yrsno datano data
Alan Lindstrom
Senior Group Director of Investor Relations0yrsno datano data
James Cowie
Senior VP11.8yrsUS$964.06k0.046% $9.2m
Nimish Modi
Senior Vice President of Marketing & Business Development0yrsUS$1.43mno data

11.1yrs

Average Tenure

54yo

Average Age

Experienced Management: CDNS's management team is seasoned and experienced (11.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Lip-Bu Tan
CEO & Director11.1yrsUS$7.56m0.74% $148.4m
Young Sohn
Director7yrsUS$319.00k0.018% $3.6m
Mary Wilderotter
Independent Director2.7yrsUS$292.00k0.0047% $945.5k
Roger Siboni
Independent Director21.1yrsUS$355.90k0.016% $3.2m
Mark Adams
Independent Director5yrsUS$299.00k0.0089% $1.8m
James Plummer
Independent Director8.3yrsUS$320.00k0.015% $3.0m
Alberto Sangiovanni-Vincentelli
Independent Director28.1yrsUS$303.18k0.029% $5.7m
John Shoven
Independent Chairman of the Board15.1yrsUS$463.43k0.071% $14.2m
Susan Bostrom
Independent Director9yrsUS$338.00k0.0055% $1.1m

9.0yrs

Average Tenure

64yo

Average Age

Experienced Board: CDNS's board of directors are considered experienced (9 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold 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 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$20.032b
  • 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
CDSXTRA (XETRA Trading Platform)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 and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel simulation platform; Palladium Z1, an enterprise emulation platform; and Protium S1 field-programmable gate array prototyping platform. The company also provides digital IC design products, such as logic design products for chip planning, design, verification, and test technologies and services; physical implementation tools, including place and route, signal integrity, optimization, and multiple patterning preparation; and signoff products to signoff the design as ready for manufacture by a silicon foundry, as well as design for manufacturing products for use in the product development process. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system interconnect design products to develop printed circuit boards and IC packages. Further, the company provides design intellectual property (IP) products consisting of pre-verified and customizable functional blocks to integrate into customer’s ICs; and verification IP and memory models for use in system-level verification to model correct behavior of full systems interacting with their environments. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. Cadence Design Systems, Inc. was founded in 1988 and is headquartered in San Jose, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/25 23:49
End of Day Share Price2020/02/25 00:00
Earnings2019/12/28
Annual Earnings2019/12/28


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.