CADENCE DESIGN SYS INC (CDNS) Fundamental Analysis & Valuation
NASDAQ:CDNS • US1273871087
298.05 USD
+1.11 (+0.37%)
At close: Mar 9, 2026
298.05 USD
0 (0%)
After Hours: 3/9/2026, 6:01:17 PM
This CDNS fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.
Taking everything into account, CDNS scores 7 out of 10 in our fundamental rating. CDNS was compared to 277 industry peers in the Software industry. Both the health and profitability get an excellent rating, making CDNS a very profitable company, without any liquidiy or solvency issues. CDNS shows excellent growth, but is valued quite expensive already. These ratings could make CDNS a good candidate for growth and quality investing.
1. CDNS Profitability Analysis
1.1 Basic Checks
- In the past year CDNS was profitable.
- CDNS had a positive operating cash flow in the past year.
- Each year in the past 5 years CDNS has been profitable.
- In the past 5 years CDNS always reported a positive cash flow from operatings.
1.2 Ratios
- Looking at the Return On Assets, with a value of 10.92%, CDNS belongs to the top of the industry, outperforming 86.64% of the companies in the same industry.
- CDNS has a better Return On Equity (20.26%) than 87.00% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 14.48%, CDNS belongs to the top of the industry, outperforming 92.06% of the companies in the same industry.
- The Average Return On Invested Capital over the past 3 years for CDNS is significantly above the industry average of 10.84%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.92% | ||
| ROE | 20.26% | ||
| ROIC | 14.48% |
ROA(3y)13.68%
ROA(5y)14.69%
ROE(3y)24.47%
ROE(5y)25.95%
ROIC(3y)17.13%
ROIC(5y)17.76%
1.3 Margins
- CDNS's Profit Margin of 20.94% is amongst the best of the industry. CDNS outperforms 87.36% of its industry peers.
- CDNS's Profit Margin has been stable in the last couple of years.
- CDNS's Operating Margin of 31.36% is amongst the best of the industry. CDNS outperforms 94.95% of its industry peers.
- In the last couple of years the Operating Margin of CDNS has grown nicely.
- CDNS has a Gross Margin of 86.36%. This is amongst the best in the industry. CDNS outperforms 92.42% of its industry peers.
- In the last couple of years the Gross Margin of CDNS has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 31.36% | ||
| PM (TTM) | 20.94% | ||
| GM | 86.36% |
OM growth 3Y1.71%
OM growth 5Y5.38%
PM growth 3Y-4.23%
PM growth 5Y-1%
GM growth 3Y-1.21%
GM growth 5Y-0.51%
2. CDNS Health Analysis
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CDNS is still creating some value.
- Compared to 1 year ago, CDNS has less shares outstanding
- The number of shares outstanding for CDNS has been reduced compared to 5 years ago.
- CDNS has a better debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 12.90 indicates that CDNS is not in any danger for bankruptcy at the moment.
- The Altman-Z score of CDNS (12.90) is better than 93.86% of its industry peers.
- CDNS has a debt to FCF ratio of 1.56. This is a very positive value and a sign of high solvency as it would only need 1.56 years to pay back of all of its debts.
- CDNS has a Debt to FCF ratio of 1.56. This is in the better half of the industry: CDNS outperforms 70.40% of its industry peers.
- CDNS has a Debt/Equity ratio of 0.45. This is a healthy value indicating a solid balance between debt and equity.
- With a Debt to Equity ratio value of 0.45, CDNS is not doing good in the industry: 64.26% of the companies in the same industry are doing better.
- Although CDNS's pure debt/equity ratio does not look good, it has limited outstanding debt compared to the Free Cash Flow. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 1.56 | ||
| Altman-Z | 12.9 |
ROIC/WACC1.34
WACC10.83%
2.3 Liquidity
- A Current Ratio of 2.86 indicates that CDNS has no problem at all paying its short term obligations.
- Looking at the Current ratio, with a value of 2.86, CDNS is in the better half of the industry, outperforming 72.56% of the companies in the same industry.
- A Quick Ratio of 2.67 indicates that CDNS has no problem at all paying its short term obligations.
- CDNS has a Quick ratio of 2.67. This is in the better half of the industry: CDNS outperforms 71.12% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.86 | ||
| Quick Ratio | 2.67 |
3. CDNS Growth Analysis
3.1 Past
- The Earnings Per Share has grown by an nice 19.60% over the past year.
- Measured over the past years, CDNS shows a very strong growth in Earnings Per Share. The EPS has been growing by 20.68% on average per year.
- CDNS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.12%.
- CDNS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.57% yearly.
EPS 1Y (TTM)19.6%
EPS 3Y18.69%
EPS 5Y20.68%
EPS Q2Q%5.85%
Revenue 1Y (TTM)14.12%
Revenue growth 3Y14.14%
Revenue growth 5Y14.57%
Sales Q2Q%6.2%
3.2 Future
- The Earnings Per Share is expected to grow by 14.49% on average over the next years. This is quite good.
- Based on estimates for the next years, CDNS will show a quite strong growth in Revenue. The Revenue will grow by 12.98% on average per year.
EPS Next Y15.46%
EPS Next 2Y15.17%
EPS Next 3Y13.6%
EPS Next 5Y14.49%
Revenue Next Year13.87%
Revenue Next 2Y13.12%
Revenue Next 3Y13.02%
Revenue Next 5Y12.98%
3.3 Evolution
- The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. CDNS Valuation Analysis
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 41.74, the valuation of CDNS can be described as expensive.
- The rest of the industry has a similar Price/Earnings ratio as CDNS.
- When comparing the Price/Earnings ratio of CDNS to the average of the S&P500 Index (26.29), we can say CDNS is valued expensively.
- The Price/Forward Earnings ratio is 36.16, which means the current valuation is very expensive for CDNS.
- CDNS's Price/Forward Earnings is on the same level as the industry average.
- CDNS is valuated rather expensively when we compare the Price/Forward Earnings ratio to 24.60, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.74 | ||
| Fwd PE | 36.16 |
4.2 Price Multiples
- CDNS's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CDNS is cheaper than 62.45% of the companies in the same industry.
- CDNS's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 51.82 | ||
| EV/EBITDA | 42.93 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- CDNS has an outstanding profitability rating, which may justify a higher PE ratio.
- CDNS's earnings are expected to grow with 13.60% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.7
PEG (5Y)2.02
EPS Next 2Y15.17%
EPS Next 3Y13.6%
5. CDNS Dividend Analysis
5.1 Amount
- CDNS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0% |
CDNS Fundamentals: All Metrics, Ratios and Statistics
298.05
+1.11 (+0.37%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)02-17 2026-02-17/amc
Earnings (Next)04-27 2026-04-27
Inst Owners89.74%
Inst Owner Change3.04%
Ins Owners0.24%
Ins Owner Change-1.5%
Market Cap82.23B
Revenue(TTM)5.30B
Net Income(TTM)1.11B
Analysts83.13
Price Target379.71 (27.4%)
Short Float %1.85%
Short Ratio2.09
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0% |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.92%
Min EPS beat(2)1.98%
Max EPS beat(2)5.86%
EPS beat(4)4
Avg EPS beat(4)3.78%
Min EPS beat(4)1.98%
Max EPS beat(4)5.86%
EPS beat(8)8
Avg EPS beat(8)4.05%
EPS beat(12)12
Avg EPS beat(12)3.19%
EPS beat(16)16
Avg EPS beat(16)4.44%
Revenue beat(2)0
Avg Revenue beat(2)-0.79%
Min Revenue beat(2)-0.82%
Max Revenue beat(2)-0.75%
Revenue beat(4)1
Avg Revenue beat(4)-0.81%
Min Revenue beat(4)-1.71%
Max Revenue beat(4)0.03%
Revenue beat(8)2
Avg Revenue beat(8)-0.64%
Revenue beat(12)3
Avg Revenue beat(12)-0.73%
Revenue beat(16)6
Avg Revenue beat(16)-0.24%
PT rev (1m)-2.32%
PT rev (3m)-3.03%
EPS NQ rev (1m)6.07%
EPS NQ rev (3m)6.07%
EPS NY rev (1m)0.36%
EPS NY rev (3m)0.48%
Revenue NQ rev (1m)4.48%
Revenue NQ rev (3m)4.48%
Revenue NY rev (1m)1.22%
Revenue NY rev (3m)1.22%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.74 | ||
| Fwd PE | 36.16 | ||
| P/S | 15.52 | ||
| P/FCF | 51.82 | ||
| P/OCF | 47.56 | ||
| P/B | 15.02 | ||
| P/tB | 40.97 | ||
| EV/EBITDA | 42.93 |
EPS(TTM)7.14
EY2.4%
EPS(NY)8.24
Fwd EY2.77%
FCF(TTM)5.75
FCFY1.93%
OCF(TTM)6.27
OCFY2.1%
SpS19.2
BVpS19.84
TBVpS7.27
PEG (NY)2.7
PEG (5Y)2.02
Graham Number56.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.92% | ||
| ROE | 20.26% | ||
| ROCE | 19.5% | ||
| ROIC | 14.48% | ||
| ROICexc | 23% | ||
| ROICexgc | 65.08% | ||
| OM | 31.36% | ||
| PM (TTM) | 20.94% | ||
| GM | 86.36% | ||
| FCFM | 29.96% |
ROA(3y)13.68%
ROA(5y)14.69%
ROE(3y)24.47%
ROE(5y)25.95%
ROIC(3y)17.13%
ROIC(5y)17.76%
ROICexc(3y)25.61%
ROICexc(5y)25.63%
ROICexgc(3y)70.1%
ROICexgc(5y)64.45%
ROCE(3y)23.08%
ROCE(5y)24.07%
ROICexgc growth 3Y1.82%
ROICexgc growth 5Y10.8%
ROICexc growth 3Y-4.26%
ROICexc growth 5Y1.27%
OM growth 3Y1.71%
OM growth 5Y5.38%
PM growth 3Y-4.23%
PM growth 5Y-1%
GM growth 3Y-1.21%
GM growth 5Y-0.51%
F-Score7
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 1.56 | ||
| Debt/EBITDA | 1.31 | ||
| Cap/Depr | 62.27% | ||
| Cap/Sales | 2.68% | ||
| Interest Coverage | 14.84 | ||
| Cash Conversion | 91.51% | ||
| Profit Quality | 143.11% | ||
| Current Ratio | 2.86 | ||
| Quick Ratio | 2.67 | ||
| Altman-Z | 12.9 |
F-Score7
WACC10.83%
ROIC/WACC1.34
Cap/Depr(3y)68.4%
Cap/Depr(5y)69.25%
Cap/Sales(3y)2.75%
Cap/Sales(5y)2.8%
Profit Quality(3y)122.92%
Profit Quality(5y)129.8%
High Growth Momentum
Growth
EPS 1Y (TTM)19.6%
EPS 3Y18.69%
EPS 5Y20.68%
EPS Q2Q%5.85%
EPS Next Y15.46%
EPS Next 2Y15.17%
EPS Next 3Y13.6%
EPS Next 5Y14.49%
Revenue 1Y (TTM)14.12%
Revenue growth 3Y14.14%
Revenue growth 5Y14.57%
Sales Q2Q%6.2%
Revenue Next Year13.87%
Revenue Next 2Y13.12%
Revenue Next 3Y13.02%
Revenue Next 5Y12.98%
EBIT growth 1Y19.58%
EBIT growth 3Y16.1%
EBIT growth 5Y20.74%
EBIT Next Year21.71%
EBIT Next 3Y15.52%
EBIT Next 5Y15.44%
FCF growth 1Y41.94%
FCF growth 3Y12.39%
FCF growth 5Y14.39%
OCF growth 1Y37.14%
OCF growth 3Y11.66%
OCF growth 5Y13.82%
CADENCE DESIGN SYS INC / CDNS FAQ
What is the ChartMill fundamental rating of CADENCE DESIGN SYS INC (CDNS) stock?
ChartMill assigns a fundamental rating of 7 / 10 to CDNS.
What is the valuation status for CDNS stock?
ChartMill assigns a valuation rating of 3 / 10 to CADENCE DESIGN SYS INC (CDNS). This can be considered as Overvalued.
Can you provide the profitability details for CADENCE DESIGN SYS INC?
CADENCE DESIGN SYS INC (CDNS) has a profitability rating of 9 / 10.
How financially healthy is CADENCE DESIGN SYS INC?
The financial health rating of CADENCE DESIGN SYS INC (CDNS) is 8 / 10.