Taking everything into account, CDNS scores 6 out of 10 in our fundamental rating. CDNS was compared to 278 industry peers in the Software industry. While CDNS has a great profitability rating, there are some minor concerns on its financial health. CDNS shows excellent growth, but is valued quite expensive already. With these ratings, CDNS could be worth investigating further for growth investing!.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year CDNS was profitable.
CDNS had a positive operating cash flow in the past year.
In the past 5 years CDNS has always been profitable.
Each year in the past 5 years CDNS had a positive operating cash flow.

1.2 Ratios

CDNS has a better Return On Assets (11.05%) than 86.33% of its industry peers.
With an excellent Return On Equity value of 20.41%, CDNS belongs to the best of the industry, outperforming 88.13% of the companies in the same industry.
CDNS has a Return On Invested Capital of 15.75%. This is amongst the best in the industry. CDNS outperforms 92.81% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CDNS is significantly above the industry average of 10.74%.
The last Return On Invested Capital (15.75%) 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	11.05%
ROE	20.41%
ROIC	15.75%

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 Profit Margin of 20.35%. This is amongst the best in the industry. CDNS outperforms 84.53% of its industry peers.
In the last couple of years the Profit Margin of CDNS has declined.
The Operating Margin of CDNS (31.57%) is better than 93.17% of its industry peers.
CDNS's Operating Margin has improved in the last couple of years.
CDNS has a better Gross Margin (85.55%) than 92.81% 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	31.57%
PM (TTM)	20.35%
GM	85.55%

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%

More info and screens

ROA

ROE

ROIC

Operating and Profit Margin

Show most profitable peers

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.
CDNS has more shares outstanding than it did 1 year ago.
The number of shares outstanding for CDNS has been reduced compared to 5 years ago.
The debt/assets ratio for CDNS is higher compared to a year ago.

2.2 Solvency

The Debt to FCF ratio of CDNS is 1.68, which is an excellent value as it means it would take CDNS, only 1.68 years of fcf income to pay off all of its debts.
CDNS has a better Debt to FCF ratio (1.68) than 70.50% of its industry peers.
A Debt/Equity ratio of 0.48 indicates that CDNS is not too dependend on debt financing.
The Debt to Equity ratio of CDNS (0.48) is worse than 65.47% of its industry peers.
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	0.48
Debt/FCF	1.68
Altman-Z	N/A

ROIC/WACC1.43

WACC11.04%

2.3 Liquidity

CDNS has a Current Ratio of 3.05. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
With a decent Current ratio value of 3.05, CDNS is doing good in the industry, outperforming 75.54% of the companies in the same industry.
A Quick Ratio of 2.84 indicates that CDNS has no problem at all paying its short term obligations.
CDNS has a Quick ratio of 2.84. This is in the better half of the industry: CDNS outperforms 74.46% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	3.05
Quick Ratio	2.84

More info and screens

WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

Show peers with great health

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 28.52% over the past year.
CDNS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 22.21% yearly.
CDNS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 19.72%.
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)28.52%

EPS 3Y21.73%

EPS 5Y22.21%

EPS Q2Q%17.68%

Revenue 1Y (TTM)19.72%

Revenue growth 3Y15.81%

Revenue growth 5Y14.72%

Sales Q2Q%10.15%

3.2 Future

The Earnings Per Share is expected to grow by 13.14% on average over the next years. This is quite good.
The Revenue is expected to grow by 11.93% on average over the next years. This is quite good.

EPS Next Y20.59%

EPS Next 2Y17.31%

EPS Next 3Y16.39%

EPS Next 5Y13.14%

Revenue Next Year13.96%

Revenue Next 2Y13.23%

Revenue Next 3Y12.93%

Revenue Next 5Y11.93%

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.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.

More info and screens

Find the best growth stocks

Show best growing peers

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 45.28 indicates a quite expensive valuation of CDNS.
The rest of the industry has a similar Price/Earnings ratio as CDNS.
Compared to an average S&P500 Price/Earnings ratio of 27.21, CDNS is valued quite expensively.
Based on the Price/Forward Earnings ratio of 38.75, the valuation of CDNS can be described as expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CDNS is on the same level as its industry peers.
CDNS's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 25.98.

		Industry Rank	Sector Rank
PE	45.28
Fwd PE	38.75

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, CDNS is valued a bit cheaper than the industry average as 61.51% of the companies are valued more expensively.
The rest of the industry has a similar Price/Free Cash Flow ratio as CDNS.

		Industry Rank	Sector Rank
P/FCF	58.6
EV/EBITDA	46.34

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 16.39% in the coming years.