CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
NASDAQ:CDNS - Nasdaq - US1273871087 - Common Stock - Currency: USD
CDNS gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 284 industry peers in the Software industry. CDNS has an excellent profitability rating, but there are some minor concerns on its financial health. CDNS is valued quite expensively, but it does show have an excellent growth rating. With these ratings, CDNS could be worth investigating further 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.
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
The Return On Assets of CDNS (11.76%) is better than 89.86% of its industry peers.
Looking at the Return On Equity, with a value of 22.58%, CDNS belongs to the top of the industry, outperforming 89.13% of the companies in the same industry.
With an excellent Return On Invested Capital value of 14.31%, CDNS belongs to the best of the industry, outperforming 91.67% of the companies in the same industry.
CDNS had an Average Return On Invested Capital over the past 3 years of 20.11%. This is significantly above the industry average of 11.91%.
The 3 year average ROIC (20.11%) for CDNS is well above the current ROIC(14.31%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.76% | ||
| ROE | 22.58% | ||
| ROIC | 14.31% |
ROA(3y)15.55%
ROA(5y)15.49%
ROE(3y)28.03%
ROE(5y)26.64%
ROIC(3y)20.11%
ROIC(5y)18.89%
1.3 Margins
With an excellent Profit Margin value of 22.74%, CDNS belongs to the best of the industry, outperforming 90.22% of the companies in the same industry.
In the last couple of years the Profit Margin of CDNS has declined.
CDNS's Operating Margin of 29.90% is amongst the best of the industry. CDNS outperforms 94.57% of its industry peers.
In the last couple of years the Operating Margin of CDNS has grown nicely.
The Gross Margin of CDNS (86.05%) is better than 92.75% 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 | 29.9% | ||
| PM (TTM) | 22.74% | ||
| GM | 86.05% |
OM growth 3Y4.38%
OM growth 5Y6.7%
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) just above the Cost of Capital (WACC), CDNS is creating some value.
Compared to 1 year ago, CDNS has more shares outstanding
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 2.21, which is a good value as it means it would take CDNS, 2.21 years of fcf income to pay off all of its debts.
CDNS's Debt to FCF ratio of 2.21 is fine compared to the rest of the industry. CDNS outperforms 64.13% of its industry peers.
A Debt/Equity ratio of 0.53 indicates that CDNS is somewhat dependend on debt financing.
CDNS's Debt to Equity ratio of 0.53 is on the low side compared to the rest of the industry. CDNS is outperformed by 68.48% 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 | 0.53 | ||
| Debt/FCF | 2.21 | ||
| Altman-Z | N/A |
ROIC/WACC1.02
WACC14.01%
2.3 Liquidity
CDNS has a Current Ratio of 2.93. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
With a decent Current ratio value of 2.93, CDNS is doing good in the industry, outperforming 75.00% of the companies in the same industry.
CDNS has a Quick Ratio of 2.74. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
CDNS's Quick ratio of 2.74 is fine compared to the rest of the industry. CDNS outperforms 73.55% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.93 | ||
| Quick Ratio | 2.74 |
3. Growth
3.1 Past
CDNS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.92%, which is quite good.
Measured over the past years, CDNS shows a very strong growth in Earnings Per Share. The EPS has been growing by 22.21% on average per year.
Looking at the last year, CDNS shows a quite strong growth in Revenue. The Revenue has grown by 13.48% in the last year.
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)15.92%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%36.23%
Revenue 1Y (TTM)13.48%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%26.89%
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 13.84% yearly.
The Revenue is expected to grow by 12.78% on average over the next years. This is quite good.
EPS Next Y15.93%
EPS Next 2Y15.36%
EPS Next 3Y14.09%
EPS Next 5Y13.84%
Revenue Next Year13.29%
Revenue Next 2Y12.74%
Revenue Next 3Y12.95%
Revenue Next 5Y12.78%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in 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. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 43.27, which means the current valuation is very expensive for CDNS.
Compared to the rest of the industry, the Price/Earnings ratio of CDNS indicates a somewhat cheap valuation: CDNS is cheaper than 61.96% of the companies listed in the same industry.
CDNS is valuated rather expensively when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 37.33 indicates a quite expensive valuation of CDNS.
Based on the Price/Forward Earnings ratio, CDNS is valued a bit cheaper than the industry average as 62.32% of the companies are valued more expensively.
CDNS's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 22.68.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.27 | ||
| Fwd PE | 37.33 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CDNS indicates a somewhat cheap valuation: CDNS is cheaper than 68.48% of the companies listed in the same industry.
CDNS's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 63.37 | ||
| EV/EBITDA | 46.66 |
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.
CDNS's earnings are expected to grow with 14.09% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.72
PEG (5Y)1.95
EPS Next 2Y15.36%
EPS Next 3Y14.09%
5. Dividend
5.1 Amount
No dividends for CDNS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
258.34
-11.89 (-4.4%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.83%
Inst Owner Change0.4%
Ins Owners0.17%
Ins Owner Change-1.34%
Market Cap70.85B
Analysts80
Price Target333.19 (28.97%)
Short Float %1.5%
Short Ratio2.66
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly Dividend0
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)6.43%
Min EPS beat(2)1.28%
Max EPS beat(2)11.57%
EPS beat(4)4
Avg EPS beat(4)4.33%
Min EPS beat(4)1.28%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)2.89%
EPS beat(12)12
Avg EPS beat(12)4.67%
EPS beat(16)16
Avg EPS beat(16)5.34%
Revenue beat(2)1
Avg Revenue beat(2)-0.18%
Min Revenue beat(2)-1.24%
Max Revenue beat(2)0.87%
Revenue beat(4)1
Avg Revenue beat(4)-0.46%
Min Revenue beat(4)-1.26%
Max Revenue beat(4)0.87%
Revenue beat(8)2
Avg Revenue beat(8)-0.68%
Revenue beat(12)5
Avg Revenue beat(12)-0.05%
Revenue beat(16)7
Avg Revenue beat(16)-0.1%
PT rev (1m)1.21%
PT rev (3m)2.59%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0.05%
EPS NY rev (1m)-0.06%
EPS NY rev (3m)-0.15%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.07%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)-0.04%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 43.27 | ||
| Fwd PE | 37.33 | ||
| P/S | 15.27 | ||
| P/FCF | 63.37 | ||
| P/OCF | 56.21 | ||
| P/B | 15.16 | ||
| P/tB | 41.67 | ||
| EV/EBITDA | 46.66 |
EPS(TTM)5.97
EY2.31%
EPS(NY)6.92
Fwd EY2.68%
FCF(TTM)4.08
FCFY1.58%
OCF(TTM)4.6
OCFY1.78%
SpS16.92
BVpS17.04
TBVpS6.2
PEG (NY)2.72
PEG (5Y)1.95
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.76% | ||
| ROE | 22.58% | ||
| ROCE | 18.25% | ||
| ROIC | 14.31% | ||
| ROICexc | 21.94% | ||
| ROICexgc | 54.78% | ||
| OM | 29.9% | ||
| PM (TTM) | 22.74% | ||
| GM | 86.05% | ||
| FCFM | 24.09% |
ROA(3y)15.55%
ROA(5y)15.49%
ROE(3y)28.03%
ROE(5y)26.64%
ROIC(3y)20.11%
ROIC(5y)18.89%
ROICexc(3y)27.91%
ROICexc(5y)26.6%
ROICexgc(3y)71.25%
ROICexgc(5y)61.56%
ROCE(3y)25.89%
ROCE(5y)24.24%
ROICexcg growth 3Y1.16%
ROICexcg growth 5Y9.63%
ROICexc growth 3Y-6.08%
ROICexc growth 5Y1.85%
OM growth 3Y4.38%
OM growth 5Y6.7%
PM growth 3Y-0.79%
PM growth 5Y-11.69%
GM growth 3Y-1.39%
GM growth 5Y-0.58%
F-Score5
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 2.21 | ||
| Debt/EBITDA | 1.56 | ||
| Cap/Depr | 72.38% | ||
| Cap/Sales | 3.07% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 79.54% | ||
| Profit Quality | 105.92% | ||
| Current Ratio | 2.93 | ||
| Quick Ratio | 2.74 | ||
| Altman-Z | N/A |
F-Score5
WACC14.01%
ROIC/WACC1.02
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)15.92%
EPS 3Y21.73%
EPS 5Y22.21%
EPS Q2Q%36.23%
EPS Next Y15.93%
EPS Next 2Y15.36%
EPS Next 3Y14.09%
EPS Next 5Y13.84%
Revenue 1Y (TTM)13.48%
Revenue growth 3Y15.81%
Revenue growth 5Y14.72%
Sales Q2Q%26.89%
Revenue Next Year13.29%
Revenue Next 2Y12.74%
Revenue Next 3Y12.95%
Revenue Next 5Y12.78%
EBIT growth 1Y9.8%
EBIT growth 3Y20.89%
EBIT growth 5Y22.4%
EBIT Next Year24.96%
EBIT Next 3Y14.67%
EBIT Next 5Y11.69%
FCF growth 1Y-10.32%
FCF growth 3Y2.63%
FCF growth 5Y11.29%
OCF growth 1Y-6.57%
OCF growth 3Y4.61%
OCF growth 5Y11.56%