CADENCE DESIGN SYS INC (CDNS) Fundamental Analysis & Valuation
NASDAQ:CDNS • US1273871087
305.43 USD
+4.8 (+1.6%)
At close: Mar 4, 2026
304.35 USD
-1.08 (-0.35%)
After Hours: 3/4/2026, 8:13:11 PM
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
- CDNS had positive earnings in the past year.
- 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
- With an excellent Return On Assets value of 10.92%, CDNS belongs to the best of the industry, outperforming 86.96% of the companies in the same industry.
- 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.
- CDNS's Return On Invested Capital of 14.48% is amongst the best of the industry. CDNS outperforms 92.03% 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 10.80%.
| 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
- Looking at the Profit Margin, with a value of 20.94%, CDNS belongs to the top of the industry, outperforming 86.96% of the companies in the same industry.
- CDNS's Profit Margin has been stable in the last couple of years.
- The Operating Margin of CDNS (31.36%) is better than 94.93% of its industry peers.
- CDNS's Operating Margin has improved in the last couple of years.
- The Gross Margin of CDNS (86.36%) is better than 92.39% of its industry peers.
- CDNS's Gross Margin has been stable in the last couple of years.
| 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.
- The number of shares outstanding for CDNS has been reduced compared to 1 year ago.
- Compared to 5 years ago, CDNS has less shares outstanding
- Compared to 1 year ago, CDNS has an improved debt to assets ratio.
2.2 Solvency
- An Altman-Z score of 12.89 indicates that CDNS is not in any danger for bankruptcy at the moment.
- CDNS has a Altman-Z score of 12.89. This is amongst the best in 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.
- CDNS's Debt to FCF ratio of 1.56 is fine compared to the rest of the industry. CDNS outperforms 70.29% 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: 64.86% of the companies in the same industry are doing better.
- 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
WACC10.82%
2.3 Liquidity
- A Current Ratio of 2.86 indicates that CDNS has no problem at all paying its short term obligations.
- CDNS has a Current ratio of 2.86. This is in the better half of the industry: CDNS outperforms 72.46% of its industry peers.
- CDNS has a Quick Ratio of 2.67. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
- CDNS's Quick ratio of 2.67 is fine compared to the rest of the industry. CDNS outperforms 71.38% of its industry peers.
| 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.
- The Revenue has been growing by 14.57% on average over the past years. This is quite good.
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.
- CDNS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.98% yearly.
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
- Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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
- A Price/Earnings ratio of 42.78 indicates a quite expensive valuation of CDNS.
- CDNS's Price/Earnings ratio is in line with the industry average.
- CDNS's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 27.03.
- With a Price/Forward Earnings ratio of 37.18, CDNS can be considered very expensive at the moment.
- CDNS's Price/Forward Earnings is on the same level as the industry average.
- The average S&P500 Price/Forward Earnings ratio is at 25.11. CDNS is valued slightly more expensive when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 42.78 | ||
| Fwd PE | 37.18 |
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.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of CDNS is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.39 | ||
| EV/EBITDA | 42.88 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The excellent profitability rating of CDNS 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)2.84
PEG (5Y)2.07
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
305.43
+4.8 (+1.6%)
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 Cap83.14B
Revenue(TTM)5.30B
Net Income(TTM)1.11B
Analysts81.88
Price Target379.71 (24.32%)
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 | 42.78 | ||
| Fwd PE | 37.18 | ||
| P/S | 15.7 | ||
| P/FCF | 52.39 | ||
| P/OCF | 48.09 | ||
| P/B | 15.19 | ||
| P/tB | 41.43 | ||
| EV/EBITDA | 42.88 |
EPS(TTM)7.14
EY2.34%
EPS(NY)8.21
Fwd EY2.69%
FCF(TTM)5.83
FCFY1.91%
OCF(TTM)6.35
OCFY2.08%
SpS19.46
BVpS20.11
TBVpS7.37
PEG (NY)2.84
PEG (5Y)2.07
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
WACC10.82%
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.