Why the quality investor may take a look at CADENCE DESIGN SYS INC (NASDAQ:CDNS).

In this article we will dive into CADENCE DESIGN SYS INC (NASDAQ:CDNS) as a possible candidate for quality investing. Investors should always do their own research, but we noticed CADENCE DESIGN SYS INC showing up in our Caviar Cruise quality screen, which makes it worth to investigate a bit more.

What matters for quality investors.

• CADENCE DESIGN SYS INC has demonstrated significant revenue growth over the past 5 years, with a 12.89% increase. This underscores the company's ability to adapt to market dynamics and capitalize on growth opportunities.
• With a robust ROIC excluding cash and goodwill at 71.98%, CADENCE DESIGN SYS INC showcases its effective allocation of capital and operational excellence. This metric signifies the company's ability to generate attractive returns and supports its long-term financial performance.
• CADENCE DESIGN SYS INC demonstrates a well-balanced Debt/Free Cash Flow Ratio of 0.53, indicating effective debt management and strong cash flow generation. This ratio suggests the company has a sustainable financial position and the capacity to allocate capital efficiently.
• With a robust Profit Quality (5-year) ratio of 128.0%, CADENCE DESIGN SYS INC highlights its ability to consistently generate high-quality profits. This metric reflects the company's effective management and operational excellence in delivering reliable earnings over the long term.
• CADENCE DESIGN SYS INC has demonstrated consistent growth in EBIT over the past 5 years, with a strong 26.35%. This signifies the company's ability to generate sustainable earnings and reflects its positive financial trajectory.
• CADENCE DESIGN SYS INC demonstrates a remarkable trend where its EBIT 5-year growth exceeds its Revenue 5-year growth. This indicates the company's ability to enhance its profitability through improved cost control and operational efficiency.

Fundamental Analysis Observations

ChartMill assigns a Fundamental Rating to every stock. This score ranges from 0 to 10 and is updated daily. The score is determined by evaluating multiple fundamental indicators and properties.

We assign a fundamental rating of 7 out of 10 to CDNS. CDNS was compared to 279 industry peers in the Software industry. CDNS scores excellent points on both the profitability and health parts. This is a solid base for a good stock. CDNS is not overvalued while it is showing excellent growth. This is an interesting combination. These ratings could make CDNS a good candidate for growth and quality investing.

Our latest full fundamental report of CDNS contains the most current fundamental analsysis.

More quality stocks can be found in our Caviar Cruise screen.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.