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 282 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 is valued quite expensive, but it does show an excellent growth. With these ratings, CDNS could be worth investigating further for growth and quality investing!.
1. Profitability
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.
In the past 5 years CDNS always reported a positive cash flow from operatings.
1.2 Ratios
CDNS has a Return On Assets of 12.00%. This is amongst the best in the industry. CDNS outperforms 89.36% of its industry peers.
Looking at the Return On Equity, with a value of 22.64%, CDNS belongs to the top of the industry, outperforming 87.94% of the companies in the same industry.
CDNS's Return On Invested Capital of 15.16% is amongst the best of the industry. CDNS outperforms 92.20% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CDNS is significantly above the industry average of 12.26%.
The 3 year average ROIC (20.16%) for CDNS is well above the current ROIC(15.16%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12% | ||
| ROE | 22.64% | ||
| ROIC | 15.16% |
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
The Profit Margin of CDNS (22.19%) is better than 90.43% of its industry peers.
In the last couple of years the Profit Margin of CDNS has declined.
The Operating Margin of CDNS (30.60%) is better than 94.68% of its industry peers.
In the last couple of years the Operating Margin of CDNS has grown nicely.
CDNS's Gross Margin of 85.86% is amongst the best of the industry. CDNS outperforms 94.33% 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 | 30.6% | ||
| PM (TTM) | 22.19% | ||
| GM | 85.86% |
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), CDNS 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.
Compared to 1 year ago, CDNS has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 14.92 indicates that CDNS is not in any danger for bankruptcy at the moment.
CDNS's Altman-Z score of 14.92 is amongst the best of the industry. CDNS outperforms 90.07% of its industry peers.
The Debt to FCF ratio of CDNS is 1.80, which is an excellent value as it means it would take CDNS, only 1.80 years of fcf income to pay off all of its debts.
With a decent Debt to FCF ratio value of 1.80, CDNS is doing good in the industry, outperforming 69.15% of the companies in the same industry.
CDNS has a Debt/Equity ratio of 0.52. This is a neutral value indicating CDNS is somewhat dependend on debt financing.
CDNS's Debt to Equity ratio of 0.52 is on the low side compared to the rest of the industry. CDNS is outperformed by 65.25% of its industry peers.
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 | 0.52 | ||
| Debt/FCF | 1.8 | ||
| Altman-Z | 14.92 |
ROIC/WACC1.4
WACC10.84%
2.3 Liquidity
CDNS has a Current Ratio of 3.07. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
With a decent Current ratio value of 3.07, CDNS is doing good in the industry, outperforming 78.37% of the companies in the same industry.
A Quick Ratio of 2.90 indicates that CDNS has no problem at all paying its short term obligations.
With a decent Quick ratio value of 2.90, CDNS is doing good in the industry, outperforming 77.31% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.07 | ||
| Quick Ratio | 2.9 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 26.64% 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.
The Revenue has grown by 19.55% in the past year. This is quite good.
Measured over the past years, CDNS shows a quite strong growth in Revenue. The Revenue has been growing by 14.72% on average per year.
EPS 1Y (TTM)26.64%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%34.19%
Revenue 1Y (TTM)19.55%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%23.12%
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 10.75% on average per year.
Based on estimates for the next years, CDNS will show a quite strong growth in Revenue. The Revenue will grow by 9.79% on average per year.
EPS Next Y15.94%
EPS Next 2Y15.18%
EPS Next 3Y14.75%
EPS Next 5Y10.75%
Revenue Next Year11.89%
Revenue Next 2Y11.81%
Revenue Next 3Y11.64%
Revenue Next 5Y9.79%
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 decreasing.
4. Valuation
4.1 Price/Earnings Ratio
CDNS is valuated quite expensively with a Price/Earnings ratio of 50.75.
Based on the Price/Earnings ratio, CDNS is valued a bit cheaper than 60.28% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.30. CDNS is valued rather expensively when compared to this.
A Price/Forward Earnings ratio of 40.82 indicates a quite expensive valuation of CDNS.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CDNS is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, CDNS is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 50.75 | ||
| Fwd PE | 40.82 |
4.2 Price Multiples
64.89% 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 | 64.04 | ||
| EV/EBITDA | 51.69 |
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 14.75% in the coming years.
PEG (NY)3.18
PEG (5Y)2.29
EPS Next 2Y15.18%
EPS Next 3Y14.75%
5. Dividend
5.1 Amount
CDNS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
323.28
+2.98 (+0.93%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.67%
Inst Owner Change0.04%
Ins Owners0.27%
Ins Owner Change9.3%
Market Cap88.27B
Analysts79.29
Price Target329.39 (1.89%)
Short Float %1.35%
Short Ratio1.81
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)2.25%
Min EPS beat(2)1.28%
Max EPS beat(2)3.21%
EPS beat(4)4
Avg EPS beat(4)4.65%
Min EPS beat(4)1.28%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)3.2%
EPS beat(12)12
Avg EPS beat(12)3.86%
EPS beat(16)16
Avg EPS beat(16)5%
Revenue beat(2)0
Avg Revenue beat(2)-1.48%
Min Revenue beat(2)-1.71%
Max Revenue beat(2)-1.24%
Revenue beat(4)1
Avg Revenue beat(4)-0.57%
Min Revenue beat(4)-1.71%
Max Revenue beat(4)0.87%
Revenue beat(8)2
Avg Revenue beat(8)-0.81%
Revenue beat(12)4
Avg Revenue beat(12)-0.45%
Revenue beat(16)6
Avg Revenue beat(16)-0.24%
PT rev (1m)1.7%
PT rev (3m)1.32%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.42%
EPS NY rev (1m)-0.15%
EPS NY rev (3m)0.93%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.39%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 50.75 | ||
| Fwd PE | 40.82 | ||
| P/S | 18.11 | ||
| P/FCF | 64.04 | ||
| P/OCF | 59.07 | ||
| P/B | 18.48 | ||
| P/tB | 49.8 | ||
| EV/EBITDA | 51.69 |
EPS(TTM)6.37
EY1.97%
EPS(NY)7.92
Fwd EY2.45%
FCF(TTM)5.05
FCFY1.56%
OCF(TTM)5.47
OCFY1.69%
SpS17.85
BVpS17.49
TBVpS6.49
PEG (NY)3.18
PEG (5Y)2.29
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 12% | ||
| ROE | 22.64% | ||
| ROCE | 19.34% | ||
| ROIC | 15.16% | ||
| ROICexc | 23.7% | ||
| ROICexgc | 60.56% | ||
| OM | 30.6% | ||
| PM (TTM) | 22.19% | ||
| GM | 85.86% | ||
| FCFM | 28.28% |
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 Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.52 | ||
| Debt/FCF | 1.8 | ||
| Debt/EBITDA | 1.46 | ||
| Cap/Depr | 55.16% | ||
| Cap/Sales | 2.38% | ||
| Interest Coverage | 15.86 | ||
| Cash Conversion | 87.81% | ||
| Profit Quality | 127.46% | ||
| Current Ratio | 3.07 | ||
| Quick Ratio | 2.9 | ||
| Altman-Z | 14.92 |
F-Score5
WACC10.84%
ROIC/WACC1.4
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)26.64%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%34.19%
EPS Next Y15.94%
EPS Next 2Y15.18%
EPS Next 3Y14.75%
EPS Next 5Y10.75%
Revenue 1Y (TTM)19.55%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%23.12%
Revenue Next Year11.89%
Revenue Next 2Y11.81%
Revenue Next 3Y11.64%
Revenue Next 5Y9.79%
EBIT growth 1Y24.2%
EBIT growth 3Y21.31%
EBIT growth 5Y22.65%
EBIT Next Year24.07%
EBIT Next 3Y16.97%
EBIT Next 5Y9.92%
FCF growth 1Y32.44%
FCF growth 3Y2.63%
FCF growth 5Y11.29%
OCF growth 1Y27.43%
OCF growth 3Y4.61%
OCF growth 5Y11.56%