CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
NASDAQ:CDNS - Nasdaq - US1273871087 - Common Stock - Currency: USD
CDNS gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 283 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. Profitability
1.1 Basic Checks
CDNS had positive earnings in the past year.
In the past year CDNS had a positive cash flow from operations.
In the past 5 years CDNS has always been profitable.
In the past 5 years CDNS always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of CDNS (11.76%) is better than 87.99% of its industry peers.
Looking at the Return On Equity, with a value of 22.58%, CDNS belongs to the top of the industry, outperforming 88.69% of the companies in the same industry.
CDNS has a better Return On Invested Capital (14.33%) than 91.87% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CDNS is significantly above the industry average of 11.25%.
The last Return On Invested Capital (14.33%) for CDNS is well below the 3 year average (20.16%), which needs to be investigated, but indicates that CDNS had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.76% | ||
| ROE | 22.58% | ||
| ROIC | 14.33% |
ROA(3y)15.55%
ROA(5y)15.49%
ROE(3y)28.03%
ROE(5y)26.64%
ROIC(3y)20.16%
ROIC(5y)18.92%
1.3 Margins
CDNS has a better Profit Margin (22.74%) than 88.69% of its industry peers.
CDNS's Profit Margin has declined in the last couple of years.
CDNS has a Operating Margin of 29.93%. This is amongst the best in the industry. CDNS outperforms 94.35% of its industry peers.
CDNS's Operating Margin has improved in the last couple of years.
With an excellent Gross Margin value of 86.05%, CDNS belongs to the best of the industry, outperforming 93.29% of the companies in the same industry.
CDNS's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 29.93% | ||
| PM (TTM) | 22.74% | ||
| GM | 86.05% |
OM growth 3Y4.75%
OM growth 5Y6.92%
PM growth 3Y-0.79%
PM growth 5Y-11.69%
GM growth 3Y-1.39%
GM growth 5Y-0.58%
2. Health
2.1 Basic Checks
CDNS has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for CDNS has been increased compared to 1 year ago.
Compared to 5 years ago, CDNS has less shares outstanding
CDNS has a worse debt/assets ratio than last year.
2.2 Solvency
CDNS has an Altman-Z score of 12.27. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of CDNS (12.27) is better than 90.11% of its industry peers.
CDNS has a debt to FCF ratio of 2.21. This is a good value and a sign of high solvency as CDNS would need 2.21 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 2.21, CDNS is doing good in the industry, outperforming 65.37% of the companies in the same industry.
A Debt/Equity ratio of 0.53 indicates that CDNS is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.53, CDNS is doing worse than 66.08% of the companies in the same industry.
Although CDNS does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. 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 | 0.53 | ||
| Debt/FCF | 2.21 | ||
| Altman-Z | 12.27 |
ROIC/WACC1.32
WACC10.82%
2.3 Liquidity
A Current Ratio of 2.93 indicates that CDNS has no problem at all paying its short term obligations.
The Current ratio of CDNS (2.93) is better than 72.44% of its industry peers.
CDNS has a Quick Ratio of 2.74. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
CDNS's Quick ratio of 2.74 is fine compared to the rest of the industry. CDNS outperforms 71.02% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.93 | ||
| Quick Ratio | 2.74 |
3. Growth
3.1 Past
CDNS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.92%, which is quite good.
The Earnings Per Share has been growing by 22.21% on average over the past years. This is a very strong growth
Looking at the last year, CDNS shows a quite strong growth in Revenue. The Revenue has grown by 13.48% in the last year.
CDNS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 14.72% yearly.
EPS 1Y (TTM)15.92%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%36.23%
Revenue 1Y (TTM)13.48%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%26.89%
3.2 Future
Based on estimates for the next years, CDNS will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.08% on average per year.
The Revenue is expected to grow by 11.01% on average over the next years. This is quite good.
EPS Next Y14.87%
EPS Next 2Y15.04%
EPS Next 3Y14.39%
EPS Next 5Y12.08%
Revenue Next Year12.02%
Revenue Next 2Y12%
Revenue Next 3Y12.12%
Revenue Next 5Y11.01%
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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 43.59 indicates a quite expensive valuation of CDNS.
Compared to the rest of the industry, the Price/Earnings ratio of CDNS is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 28.29. CDNS is valued rather expensively when compared to this.
CDNS is valuated quite expensively with a Price/Forward Earnings ratio of 37.95.
CDNS's Price/Forward Earnings is on the same level as the industry average.
When comparing the Price/Forward Earnings ratio of CDNS to the average of the S&P500 Index (21.08), we can say CDNS is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.59 | ||
| Fwd PE | 37.95 |
4.2 Price Multiples
CDNS's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CDNS is cheaper than 67.14% 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 | 63.85 | ||
| EV/EBITDA | 44.72 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates CDNS does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of CDNS may justify a higher PE ratio.
CDNS's earnings are expected to grow with 14.39% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.93
PEG (5Y)1.96
EPS Next 2Y15.04%
EPS Next 3Y14.39%
5. Dividend
5.1 Amount
No dividends for CDNS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
260.22
+0.96 (+0.37%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.7%
Inst Owner Change0.01%
Ins Owners0.16%
Ins Owner Change9.06%
Market Cap71.38B
Analysts80
Price Target325.09 (24.93%)
Short Float %1.55%
Short Ratio2.05
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
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)6.43%
Min EPS beat(2)1.28%
Max EPS beat(2)11.57%
EPS beat(4)4
Avg EPS beat(4)4.33%
Min EPS beat(4)1.28%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)2.89%
EPS beat(12)12
Avg EPS beat(12)4.67%
EPS beat(16)16
Avg EPS beat(16)5.34%
Revenue beat(2)1
Avg Revenue beat(2)-0.18%
Min Revenue beat(2)-1.24%
Max Revenue beat(2)0.87%
Revenue beat(4)1
Avg Revenue beat(4)-0.46%
Min Revenue beat(4)-1.26%
Max Revenue beat(4)0.87%
Revenue beat(8)2
Avg Revenue beat(8)-0.68%
Revenue beat(12)5
Avg Revenue beat(12)-0.05%
Revenue beat(16)7
Avg Revenue beat(16)-0.1%
PT rev (1m)-2.16%
PT rev (3m)-0.61%
EPS NQ rev (1m)-0.05%
EPS NQ rev (3m)-5.22%
EPS NY rev (1m)-0.91%
EPS NY rev (3m)-1.88%
Revenue NQ rev (1m)-0.08%
Revenue NQ rev (3m)-0.86%
Revenue NY rev (1m)-0.06%
Revenue NY rev (3m)-1.29%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.59 | ||
| Fwd PE | 37.95 | ||
| P/S | 15.38 | ||
| P/FCF | 63.85 | ||
| P/OCF | 56.63 | ||
| P/B | 15.27 | ||
| P/tB | 41.98 | ||
| EV/EBITDA | 44.72 |
EPS(TTM)5.97
EY2.29%
EPS(NY)6.86
Fwd EY2.64%
FCF(TTM)4.08
FCFY1.57%
OCF(TTM)4.6
OCFY1.77%
SpS16.92
BVpS17.04
TBVpS6.2
PEG (NY)2.93
PEG (5Y)1.96
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.76% | ||
| ROE | 22.58% | ||
| ROCE | 18.27% | ||
| ROIC | 14.33% | ||
| ROICexc | 22.6% | ||
| ROICexgc | 59% | ||
| OM | 29.93% | ||
| PM (TTM) | 22.74% | ||
| GM | 86.05% | ||
| FCFM | 24.09% |
ROA(3y)15.55%
ROA(5y)15.49%
ROE(3y)28.03%
ROE(5y)26.64%
ROIC(3y)20.16%
ROIC(5y)18.92%
ROICexc(3y)28.2%
ROICexc(5y)26.78%
ROICexgc(3y)72.83%
ROICexgc(5y)62.51%
ROCE(3y)25.95%
ROCE(5y)24.28%
ROICexcg growth 3Y4.04%
ROICexcg growth 5Y11.48%
ROICexc growth 3Y-4.84%
ROICexc growth 5Y2.66%
OM growth 3Y4.75%
OM growth 5Y6.92%
PM growth 3Y-0.79%
PM growth 5Y-11.69%
GM growth 3Y-1.39%
GM growth 5Y-0.58%
F-Score5
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 2.21 | ||
| Debt/EBITDA | 1.56 | ||
| Cap/Depr | 72.38% | ||
| Cap/Sales | 3.07% | ||
| Interest Coverage | 32.14 | ||
| Cash Conversion | 79.47% | ||
| Profit Quality | 105.92% | ||
| Current Ratio | 2.93 | ||
| Quick Ratio | 2.74 | ||
| Altman-Z | 12.27 |
F-Score5
WACC10.82%
ROIC/WACC1.32
Cap/Depr(3y)78.98%
Cap/Depr(5y)69.81%
Cap/Sales(3y)3.02%
Cap/Sales(5y)2.97%
Profit Quality(3y)119.1%
Profit Quality(5y)128.61%
High Growth Momentum
Growth
EPS 1Y (TTM)15.92%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%36.23%
EPS Next Y14.87%
EPS Next 2Y15.04%
EPS Next 3Y14.39%
EPS Next 5Y12.08%
Revenue 1Y (TTM)13.48%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%26.89%
Revenue Next Year12.02%
Revenue Next 2Y12%
Revenue Next 3Y12.12%
Revenue Next 5Y11.01%
EBIT growth 1Y9.9%
EBIT growth 3Y21.31%
EBIT growth 5Y22.65%
EBIT Next Year23.77%
EBIT Next 3Y15.83%
EBIT Next 5Y9.9%
FCF growth 1Y-10.32%
FCF growth 3Y2.63%
FCF growth 5Y11.29%
OCF growth 1Y-6.57%
OCF growth 3Y4.61%
OCF growth 5Y11.56%