CADENCE DESIGN SYS INC (CDNS) Fundamental Analysis & Valuation
NASDAQ:CDNS • US1273871087
300.63 USD
-2.73 (-0.9%)
At close: Mar 3, 2026
300.61 USD
-0.02 (-0.01%)
Pre-Market: 3/4/2026, 4:44:37 AM
This CDNS fundamental analysis includes valuation metrics, fair value assessment, financial health analysis, profitability trends, growth metrics and dividend sustainability analysis.
We assign a fundamental rating of 7 out of 10 to CDNS. CDNS was compared to 276 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 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.
- Each year in the past 5 years CDNS had a positive operating cash flow.
1.2 Ratios
- The Return On Assets of CDNS (10.92%) is better than 86.96% of its industry peers.
- Looking at the Return On Equity, with a value of 20.26%, CDNS belongs to the top of the industry, outperforming 86.96% of the companies in the same industry.
- With an excellent Return On Invested Capital value of 14.48%, CDNS belongs to the best of the industry, outperforming 92.03% of the companies in the same industry.
- Measured over the past 3 years, the Average Return On Invested Capital for CDNS is significantly above the industry average of 10.79%.
| 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 has a better Profit Margin (20.94%) than 86.96% of its industry peers.
- In the last couple of years the Profit Margin of CDNS has remained more or less at the same level.
- CDNS has a better Operating Margin (31.36%) than 94.93% of its industry peers.
- In the last couple of years the Operating Margin of CDNS has grown nicely.
- Looking at the Gross Margin, with a value of 86.36%, CDNS belongs to the top of the industry, outperforming 92.39% of the companies in the same industry.
- 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.
- CDNS has less shares outstanding than it did 1 year ago.
- Compared to 5 years ago, CDNS has less shares outstanding
- CDNS has a better debt/assets ratio than last year.
2.2 Solvency
- CDNS has an Altman-Z score of 12.89. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
- CDNS's Altman-Z score of 12.89 is amongst the best of the industry. CDNS outperforms 94.20% 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.
- The Debt to FCF ratio of CDNS (1.56) is better than 70.29% of its industry peers.
- A Debt/Equity ratio of 0.45 indicates that CDNS is not too dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.45, CDNS is doing worse than 64.86% of the companies in the same industry.
- Even though the debt/equity ratio score it not favorable for CDNS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.45 | ||
| Debt/FCF | 1.56 | ||
| Altman-Z | 12.89 |
ROIC/WACC1.34
WACC10.81%
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 72.46% 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.
- With a decent Quick ratio value of 2.67, CDNS is doing good in the industry, outperforming 71.38% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.86 | ||
| Quick Ratio | 2.67 |
3. CDNS Growth Analysis
3.1 Past
- CDNS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 19.60%, which is quite good.
- CDNS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.68% yearly.
- The Revenue has grown by 14.12% in the past year. This is quite good.
- 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 Y15.05%
EPS Next 2Y14.83%
EPS Next 3Y12.44%
EPS Next 5Y14.49%
Revenue Next Year12.49%
Revenue Next 2Y12.42%
Revenue Next 3Y11.73%
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 42.11, the valuation of CDNS can be described as expensive.
- CDNS's Price/Earnings ratio is in line with the industry average.
- The average S&P500 Price/Earnings ratio is at 26.83. CDNS is valued rather expensively when compared to this.
- The Price/Forward Earnings ratio is 36.60, which means the current valuation is very expensive for CDNS.
- CDNS's Price/Forward Earnings is on the same level as the industry average.
- Compared to an average S&P500 Price/Forward Earnings ratio of 24.95, CDNS is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 42.11 | ||
| Fwd PE | 36.6 |
4.2 Price Multiples
- 61.23% of the companies in the same industry are more expensive than CDNS, based on the Enterprise Value to EBITDA ratio.
- CDNS's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 51.57 | ||
| EV/EBITDA | 42.88 |
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.
- CDNS has an outstanding profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as CDNS's earnings are expected to grow with 12.44% in the coming years.
PEG (NY)2.8
PEG (5Y)2.04
EPS Next 2Y14.83%
EPS Next 3Y12.44%
5. CDNS Dividend Analysis
5.1 Amount
- No dividends for CDNS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0% |
CDNS Fundamentals: All Metrics, Ratios and Statistics
300.63
-2.73 (-0.9%)
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 Owners91.74%
Inst Owner Change3.04%
Ins Owners0.25%
Ins Owner Change-1.5%
Market Cap81.83B
Revenue(TTM)5.30B
Net Income(TTM)1.11B
Analysts81.88
Price Target379.71 (26.3%)
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)-2.52%
PT rev (3m)-2.4%
EPS NQ rev (1m)6.96%
EPS NQ rev (3m)6.98%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)0.26%
Revenue NQ rev (1m)4.34%
Revenue NQ rev (3m)4.41%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 42.11 | ||
| Fwd PE | 36.6 | ||
| P/S | 15.45 | ||
| P/FCF | 51.57 | ||
| P/OCF | 47.33 | ||
| P/B | 14.95 | ||
| P/tB | 40.78 | ||
| EV/EBITDA | 42.88 |
EPS(TTM)7.14
EY2.38%
EPS(NY)8.21
Fwd EY2.73%
FCF(TTM)5.83
FCFY1.94%
OCF(TTM)6.35
OCFY2.11%
SpS19.46
BVpS20.11
TBVpS7.37
PEG (NY)2.8
PEG (5Y)2.04
Graham Number56.84
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 | 12.89 |
F-Score7
WACC10.81%
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 Y15.05%
EPS Next 2Y14.83%
EPS Next 3Y12.44%
EPS Next 5Y14.49%
Revenue 1Y (TTM)14.12%
Revenue growth 3Y14.14%
Revenue growth 5Y14.57%
Sales Q2Q%6.2%
Revenue Next Year12.49%
Revenue Next 2Y12.42%
Revenue Next 3Y11.73%
Revenue Next 5Y12.98%
EBIT growth 1Y19.58%
EBIT growth 3Y16.1%
EBIT growth 5Y20.74%
EBIT Next Year21.92%
EBIT Next 3Y16.03%
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.