CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
USA - NASDAQ:CDNS - US1273871087 - Common Stock
364.88 USD
+17.61 (+5.07%)
367 USD
+2.12 (+0.58%)
Taking everything into account, CDNS scores 6 out of 10 in our fundamental rating. CDNS was compared to 280 industry peers in the Software industry. CDNS scores excellent on profitability, but there are some minor concerns on its financial health. CDNS shows excellent growth, but is valued quite expensive already. These ratings could make CDNS a good candidate for growth investing.
1. Profitability
1.1 Basic Checks
In the past year CDNS was profitable.
In the past year CDNS had a positive cash flow from operations.
In the past 5 years CDNS has always been profitable.
CDNS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
CDNS has a better Return On Assets (10.64%) than 87.14% of its industry peers.
CDNS's Return On Equity of 20.21% is amongst the best of the industry. CDNS outperforms 86.43% of its industry peers.
CDNS has a Return On Invested Capital of 15.31%. This is amongst the best in the industry. CDNS outperforms 92.14% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CDNS is significantly above the industry average of 11.76%.
The 3 year average ROIC (20.16%) for CDNS is well above the current ROIC(15.31%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.64% | ||
| ROE | 20.21% | ||
| ROIC | 15.31% |
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
Looking at the Profit Margin, with a value of 19.88%, CDNS belongs to the top of the industry, outperforming 84.64% of the companies in the same industry.
In the last couple of years the Profit Margin of CDNS has declined.
The Operating Margin of CDNS (30.74%) is better than 92.86% of its industry peers.
CDNS's Operating Margin has improved in the last couple of years.
CDNS has a better Gross Margin (85.57%) than 92.86% 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 | 30.74% | ||
| PM (TTM) | 19.88% | ||
| GM | 85.57% |
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.
The number of shares outstanding for CDNS has been increased compared to 1 year ago.
CDNS has less shares outstanding than it did 5 years ago.
CDNS has a worse debt/assets ratio than last year.
2.2 Solvency
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.
With a decent Debt to FCF ratio value of 1.56, CDNS is doing good in the industry, outperforming 69.64% of the companies in the same industry.
A Debt/Equity ratio of 0.49 indicates that CDNS is not too dependend on debt financing.
CDNS has a Debt to Equity ratio of 0.49. This is in the lower half of the industry: CDNS underperforms 65.71% 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 | 0.49 | ||
| Debt/FCF | 1.56 | ||
| Altman-Z | N/A |
ROIC/WACC1.39
WACC10.98%
2.3 Liquidity
CDNS has a Current Ratio of 2.82. 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 2.82, CDNS is in the better half of the industry, outperforming 76.79% of the companies in the same industry.
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 has a better Quick ratio (2.67) than 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.82 | ||
| Quick Ratio | 2.67 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 32.42% 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 22.29% in the past year. This is a very strong growth!
The Revenue has been growing by 14.72% on average over the past years. This is quite good.
EPS 1Y (TTM)32.42%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%28.91%
Revenue 1Y (TTM)22.29%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%20.25%
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 12.88% yearly.
CDNS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.65% yearly.
EPS Next Y18.27%
EPS Next 2Y16.4%
EPS Next 3Y15.95%
EPS Next 5Y12.88%
Revenue Next Year13.22%
Revenue Next 2Y12.68%
Revenue Next 3Y12.62%
Revenue Next 5Y11.65%
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 estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 54.14 indicates a quite expensive valuation of CDNS.
Compared to the rest of the industry, the Price/Earnings ratio of CDNS is on the same level as its industry peers.
CDNS's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 27.41.
A Price/Forward Earnings ratio of 45.11 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.
CDNS is valuated expensively when we compare the Price/Forward Earnings ratio to 22.88, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.14 | ||
| Fwd PE | 45.11 |
4.2 Price Multiples
62.50% 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 | 62.73 | ||
| EV/EBITDA | 52.94 |
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.
CDNS's earnings are expected to grow with 15.95% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.96
PEG (5Y)2.44
EPS Next 2Y16.4%
EPS Next 3Y15.95%
5. Dividend
5.1 Amount
CDNS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
364.88
+17.61 (+5.07%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.41%
Inst Owner Change-3.17%
Ins Owners0.27%
Ins Owner Change8.84%
Market Cap99.43B
Analysts78.62
Price Target375.97 (3.04%)
Short Float %1.36%
Short Ratio2.11
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)3.64%
Min EPS beat(2)3.21%
Max EPS beat(2)4.06%
EPS beat(4)4
Avg EPS beat(4)5.03%
Min EPS beat(4)1.28%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)3.59%
EPS beat(12)12
Avg EPS beat(12)3.36%
EPS beat(16)16
Avg EPS beat(16)4.59%
Revenue beat(2)1
Avg Revenue beat(2)-0.84%
Min Revenue beat(2)-1.71%
Max Revenue beat(2)0.03%
Revenue beat(4)2
Avg Revenue beat(4)-0.51%
Min Revenue beat(4)-1.71%
Max Revenue beat(4)0.87%
Revenue beat(8)3
Avg Revenue beat(8)-0.58%
Revenue beat(12)4
Avg Revenue beat(12)-0.49%
Revenue beat(16)7
Avg Revenue beat(16)-0.18%
PT rev (1m)1.35%
PT rev (3m)14.37%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.65%
EPS NY rev (1m)1.95%
EPS NY rev (3m)1.86%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)0.98%
Revenue NY rev (3m)1.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.14 | ||
| Fwd PE | 45.11 | ||
| P/S | 19.54 | ||
| P/FCF | 62.73 | ||
| P/OCF | 57.94 | ||
| P/B | 19.86 | ||
| P/tB | 55.61 | ||
| EV/EBITDA | 52.94 |
EPS(TTM)6.74
EY1.85%
EPS(NY)8.09
Fwd EY2.22%
FCF(TTM)5.82
FCFY1.59%
OCF(TTM)6.3
OCFY1.73%
SpS18.68
BVpS18.37
TBVpS6.56
PEG (NY)2.96
PEG (5Y)2.44
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.64% | ||
| ROE | 20.21% | ||
| ROCE | 19.53% | ||
| ROIC | 15.31% | ||
| ROICexc | 23.64% | ||
| ROICexgc | 62.26% | ||
| OM | 30.74% | ||
| PM (TTM) | 19.88% | ||
| GM | 85.57% | ||
| FCFM | 31.15% |
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 | 0.49 | ||
| Debt/FCF | 1.56 | ||
| Debt/EBITDA | 1.39 | ||
| Cap/Depr | 60.51% | ||
| Cap/Sales | 2.57% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 96.36% | ||
| Profit Quality | 156.64% | ||
| Current Ratio | 2.82 | ||
| Quick Ratio | 2.67 | ||
| Altman-Z | N/A |
F-Score5
WACC10.98%
ROIC/WACC1.39
Cap/Depr(3y)78.99%
Cap/Depr(5y)69.81%
Cap/Sales(3y)3.02%
Cap/Sales(5y)2.97%
Profit Quality(3y)119.11%
Profit Quality(5y)128.61%
High Growth Momentum
Growth
EPS 1Y (TTM)32.42%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%28.91%
EPS Next Y18.27%
EPS Next 2Y16.4%
EPS Next 3Y15.95%
EPS Next 5Y12.88%
Revenue 1Y (TTM)22.29%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%20.25%
Revenue Next Year13.22%
Revenue Next 2Y12.68%
Revenue Next 3Y12.62%
Revenue Next 5Y11.65%
EBIT growth 1Y30.05%
EBIT growth 3Y21.31%
EBIT growth 5Y22.65%
EBIT Next Year25.06%
EBIT Next 3Y17.9%
EBIT Next 5Y13.76%
FCF growth 1Y39.78%
FCF growth 3Y2.64%
FCF growth 5Y11.29%
OCF growth 1Y35.98%
OCF growth 3Y4.62%
OCF growth 5Y11.56%