CADENCE DESIGN SYS INC (CDNS) Fundamental Analysis & Valuation
NASDAQ:CDNS • US1273871087
294.16 USD
+0.87 (+0.3%)
At close: Mar 11, 2026
292 USD
-2.16 (-0.73%)
After Hours: 3/11/2026, 8:00:03 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. CDNS gets an excellent profitability rating and is at the same time showing great financial health properties. CDNS is valued quite expensive, but it does show an excellent growth. These ratings would make CDNS suitable for growth and quality investing!
1. CDNS Profitability Analysis
1.1 Basic Checks
- CDNS had positive earnings in the past year.
- In the past year CDNS had a positive cash flow from operations.
- 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
- CDNS's Return On Assets of 10.92% is amongst the best of the industry. CDNS outperforms 86.64% of its industry peers.
- The Return On Equity of CDNS (20.26%) is better than 87.00% of its industry peers.
- With an excellent Return On Invested Capital value of 14.48%, CDNS belongs to the best 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 10.89%.
| 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 87.36% of the companies in the same industry.
- CDNS's Profit Margin has been stable in the last couple of years.
- With an excellent Operating Margin value of 31.36%, CDNS belongs to the best of the industry, outperforming 94.95% of the companies in the same industry.
- In the last couple of years the Operating Margin of CDNS has grown nicely.
- The Gross Margin of CDNS (86.36%) is better than 92.42% 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
- CDNS has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is 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.
- The debt/assets ratio for CDNS has been reduced compared to a year ago.
2.2 Solvency
- CDNS has an Altman-Z score of 12.81. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
- With an excellent Altman-Z score value of 12.81, CDNS belongs to the best of the industry, outperforming 93.86% of the companies in the same industry.
- The Debt to FCF ratio of CDNS is 1.56, which is an excellent value as it means it would take CDNS, only 1.56 years of fcf income to pay off all of its debts.
- The Debt to FCF ratio of CDNS (1.56) is better than 70.40% of its industry peers.
- A Debt/Equity ratio of 0.45 indicates that CDNS is not too dependend on debt financing.
- CDNS has a Debt to Equity ratio of 0.45. This is in the lower half of the industry: CDNS underperforms 64.26% of its industry peers.
- 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 | 12.81 |
ROIC/WACC1.34
WACC10.83%
2.3 Liquidity
- CDNS has a Current Ratio of 2.86. This indicates that CDNS is financially healthy and has no problem in meeting 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.
- The Quick ratio of CDNS (2.67) is better than 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.
- 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
- CDNS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 14.49% yearly.
- 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 Y15.46%
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
- 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
- With a Price/Earnings ratio of 41.20, CDNS can be considered very expensive at the moment.
- The rest of the industry has a similar Price/Earnings ratio as CDNS.
- Compared to an average S&P500 Price/Earnings ratio of 26.15, CDNS is valued quite expensively.
- The Price/Forward Earnings ratio is 35.68, which means the current valuation is very expensive for CDNS.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of CDNS is on the same level as its industry peers.
- CDNS is valuated rather expensively when we compare the Price/Forward Earnings ratio to 24.27, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.2 | ||
| Fwd PE | 35.68 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, CDNS is valued a bit cheaper than 61.73% of the companies in the same industry.
- 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 | 51.14 | ||
| EV/EBITDA | 42.52 |
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.
- A more expensive valuation may be justified as CDNS's earnings are expected to grow with 13.60% in the coming years.
PEG (NY)2.67
PEG (5Y)1.99
EPS Next 2Y15.17%
EPS Next 3Y13.6%
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
294.16
+0.87 (+0.3%)
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 Cap81.15B
Revenue(TTM)5.30B
Net Income(TTM)1.11B
Analysts83.13
Price Target379.71 (29.08%)
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 | 41.2 | ||
| Fwd PE | 35.68 | ||
| P/S | 15.32 | ||
| P/FCF | 51.14 | ||
| P/OCF | 46.94 | ||
| P/B | 14.82 | ||
| P/tB | 40.44 | ||
| EV/EBITDA | 42.52 |
EPS(TTM)7.14
EY2.43%
EPS(NY)8.24
Fwd EY2.8%
FCF(TTM)5.75
FCFY1.96%
OCF(TTM)6.27
OCFY2.13%
SpS19.2
BVpS19.84
TBVpS7.27
PEG (NY)2.67
PEG (5Y)1.99
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 | 12.81 |
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.