Should Quality-Oriented Investors Explore 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 achieved substantial revenue growth over the past 5 years, with a 13.85% increase. This signifies the company's ability to successfully capture market opportunities and generate sustained revenue growth.
• With a robust ROIC excluding cash and goodwill at 72.98%, 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 maintains a healthy Debt/Free Cash Flow Ratio of 0.54, indicating a strong financial position and prudent debt management. This ratio suggests the company has sufficient free cash flow to cover its debt obligations and highlights its ability to generate cash from operations.
• With a robust Profit Quality (5-year) ratio of 121.0%, 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 25.38%. This signifies the company's ability to generate sustainable earnings and reflects its positive financial trajectory.
• With EBIT 5-year growth outpacing its Revenue 5-year growth, CADENCE DESIGN SYS INC showcases its effective cost management and enhanced operational performance. This suggests the company's ability to generate higher earnings from its revenue streams.

What is the full fundamental picture of NASDAQ:CDNS telling us.

ChartMill employs a sophisticated system to assign a Fundamental Rating to every stock in its analysis. This rating, which ranges from 0 to 10, is determined by carefully assessing multiple fundamental indicators and properties.

CDNS gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. CDNS gets an excellent profitability rating and is at the same time showing great financial health properties. CDNS is valued quite expensively, but it does show have an excellent growth rating. These ratings would make CDNS suitable for growth and quality investing!

Check the latest full fundamental report of CDNS for a complete fundamental analysis.

More ideas for quality investing can be found on ChartMill in our Caviar Cruise screen.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.