NasdaqGS:SNPS

Stock Analysis Report

Executive Summary

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits.

Rewards

PE ratio (44.2x) is below the Software industry average (46.4x)

Earnings are forecast to grow 15.07% per year

Risk Analysis

No risks detected for SNPS from our risk checks.


Snowflake Analysis

Excellent balance sheet and slightly overvalued.


Similar Companies

Share Price & News

How has Synopsys's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

-13.8%

SNPS

-8.9%

US Software

-7.4%

US Market


1 Year Return

38.5%

SNPS

26.1%

US Software

10.5%

US Market

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

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


Shareholder returns

SNPSIndustryMarket
7 Day-13.8%-8.9%-7.4%
30 Day-5.5%1.1%-3.6%
90 Day0.3%6.0%-0.6%
1 Year38.5%38.5%27.4%26.1%12.8%10.5%
3 Year96.8%96.8%130.1%120.4%37.4%28.6%
5 Year207.4%207.4%198.5%177.0%61.3%43.6%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Synopsys undervalued compared to its fair value and its price relative to the market?

44.19x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SNPS ($142.16) is trading above our estimate of fair value ($112.83)

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


Price To Earnings Ratio

PE vs Industry: SNPS is good value based on its PE Ratio (44.2x) compared to the Software industry average (46.4x).

PE vs Market: SNPS is poor value based on its PE Ratio (44.2x) compared to the US market (17.2x).


Price to Earnings Growth Ratio

PEG Ratio: SNPS is poor value based on its PEG Ratio (2.9x)


Price to Book Ratio

PB vs Industry: SNPS is good value based on its PB Ratio (5.1x) compared to the US Software industry average (5.6x).


Next Steps

Future Growth

How is Synopsys forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

15.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SNPS's forecast earnings growth (15.1% per year) is above the savings rate (1.7%).

Earnings vs Market: SNPS's earnings (15.1% per year) are forecast to grow faster than the US market (13.2% per year).

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

Revenue vs Market: SNPS's revenue (7.4% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: SNPS's revenue (7.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SNPS's Return on Equity is forecast to be low in 3 years time (17.2%).


Next Steps

Past Performance

How has Synopsys performed over the past 5 years?

20.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SNPS has high quality earnings.

Growing Profit Margin: SNPS's current net profit margins (14.3%) are lower than last year (18.6%).


Past Earnings Growth Analysis

Earnings Trend: SNPS's earnings have grown significantly by 20.1% per year over the past 5 years.

Accelerating Growth: SNPS's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SNPS had negative earnings growth (-18.1%) over the past year, making it difficult to compare to the Software industry average (21%).


Return on Equity

High ROE: SNPS's Return on Equity (11.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Synopsys's financial position?


Financial Position Analysis

Short Term Liabilities: SNPS's short term assets ($2.0B) do not cover its short term liabilities ($2.1B).

Long Term Liabilities: SNPS's short term assets ($2.0B) exceed its long term liabilities ($992.5M).


Debt to Equity History and Analysis

Debt Level: SNPS's debt to equity ratio (8%) is considered satisfactory.

Reducing Debt: SNPS's debt to equity ratio has reduced from 10.3% to 8% over the past 5 years.

Debt Coverage: SNPS's debt is well covered by operating cash flow (288.2%).

Interest Coverage: SNPS's interest payments on its debt are well covered by EBIT (270.9x coverage).


Balance Sheet

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

Debt Coverage by Assets: SNPS's debt is covered by short term assets (assets are 5.9x debt).


Next Steps

Dividend

What is Synopsys's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.5%markettop25%3.9%industryaverage1.3%forecastin3Years0%

Current dividend yield vs market & industry

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

High Dividend: Unable to evaluate SNPS'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 SNPS's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SNPS'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 SNPS'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?

4.8yrs

Average management tenure


CEO

Aart de Geus (65yo)

7.8yrs

Tenure

US$7,432,836

Compensation

Dr. Aart J. de Geus co-founded Synopsys Inc., in December 1986 and has been its Co-Chief Executive Officer since May 23, 2012. Dr. de Geus served as the Chief Executive Officer of Synopsys from January 199 ...


CEO Compensation Analysis

Compensation vs Market: Aart's total compensation ($USD7.43M) is below average for companies of similar size in the US market ($USD10.82M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Aart de Geus
Co-Founder7.8yrsUS$7.43m0.33% $71.3m
Chi-Foon Chan
Co-CEO, President & Director22yrsUS$7.43m0.14% $30.5m
Trac Pham
Chief Financial Officer5.2yrsUS$3.32m0.0077% $1.7m
John Runkel
General Counsel & Corporate Secretary5.8yrsUS$1.66m0.012% $2.7m
Joseph Logan
Sales & Corporate Marketing Officer2.6yrsUS$3.77m0.056% $12.3m
Sudhindra Kankanwadi
Principal Accounting Officer4.4yrsno data0.0071% $1.6m
Hasmukh Ranjan
Corporate VP & Chief Information Officer2.8yrsno datano data
Lisa Ewbank
Vice President of Investor Relations15.1yrsno datano data
Janet Collinson
Human Resources & Facilities Officer2.6yrsno datano data
Deirdre Hanford
Chief Security Officer1.1yrsUS$759.16kno data

4.8yrs

Average Tenure

58.5yo

Average Age

Experienced Management: SNPS's management team is considered experienced (4.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Aart de Geus
Co-Founder7.8yrsUS$7.43m0.33% $71.3m
Chi-Foon Chan
Co-CEO, President & Director22yrsUS$7.43m0.14% $30.5m
Bruce Chizen
Independent Director18.8yrsUS$299.96k0.025% $5.4m
John Schwarz
Independent Director12.8yrsUS$299.96k0.0060% $1.3m
Mercedes Johnson
Independent Director3yrsUS$329.96k0.0040% $885.6k
Roy Vallee
Lead Independent Director3yrsUS$344.96k0.032% $7.0m
Steven Walske
Independent Director28.2yrsUS$299.96k0.0094% $2.0m
Janice Chaffin
Independent Director5.2yrsUS$314.96k0.0076% $1.7m
Gary McGraw
VP of Security Technology & Chairman of Technical Advisory Board2.1yrsno datano data
Chrysostomos Nikias
Independent Director8.6yrsUS$299.96k0.015% $3.3m

10.7yrs

Average Tenure

66yo

Average Age

Experienced Board: SNPS's board of directors are seasoned and experienced ( 10.7 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: SNPS 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

Synopsys, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Synopsys, Inc.
  • Ticker: SNPS
  • Exchange: NasdaqGS
  • Founded: 1986
  • Industry: Application Software
  • Sector: Software
  • Market Cap: US$21.922b
  • Shares outstanding: 150.21m
  • Website: https://www.synopsys.com

Number of Employees


Location

  • Synopsys, Inc.
  • 690 East Middlefield Road
  • Mountain View
  • California
  • 94043
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SNPSNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDFeb 1992
0LBPLSE (London Stock Exchange)YesCommon StockGBUSDFeb 1992
SYPDB (Deutsche Boerse AG)YesCommon StockDEEURFeb 1992
SNPS *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNFeb 1992
S1NP34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 4 REPR 1 COMBRBRLJan 2020

Biography

Synopsys, Inc. provides electronic design automation software products used to design and test integrated circuits. It offers Fusion Design Platform, a digital design implementation solution; Verification Continuum Platform that provides virtual prototyping, static and formal verification, simulation, emulation, field-programmable gate array (FPGA)-based prototyping, and debug solutions; and FPGA design products that are programmed to perform specific functions. The company also offers intellectual property (IP) solutions for USB, PCI Express, DDR, Ethernet, SATA, MIPI, HDMI, and Bluetooth low energy applications; analog IP, including data converters and audio codecs; and system-on-chip infrastructure IP, datapath and building block IP, and verification IP products, as well as mathematical and floating point components, and ARM AMBA interconnect fabric and peripherals. In addition, it provides logic libraries and embedded memories; configurable processor cores and application-specific instruction-set processor tools for embedded applications; IP subsystems for audio, sensor, and data fusion functionality; and security IP solutions. Further, the company offers Platform Architect tools for SoC architecture analysis and optimization; virtual prototyping solutions; and HAPS FPGA-based prototyping systems, as well as a series of tools used in the design of optical systems and photonic devices. Additionally, it provides security testing, managed services, programs and professional services, and training that enable its customers to detect and remediate security vulnerabilities, and defects in the software development lifecycle; manufacturing solutions; and professional and other services. The company was founded in 1986 and is headquartered in Mountain View, California. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/26 00:09
End of Day Share Price2020/02/25 00:00
Earnings2020/01/31
Annual Earnings2019/10/31


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.