CADENCE DESIGN SYS INC (CDNS) Fundamental Analysis & Valuation
NASDAQ:CDNS • US1273871087
296.94 USD
-2.9 (-0.97%)
At close: Mar 6, 2026
298.15 USD
+1.21 (+0.41%)
After Hours: 3/6/2026, 8:05:28 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 279 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 expensively, but it does show have an excellent growth rating. With these ratings, CDNS could be worth investigating further for growth and quality investing!.
1. CDNS Profitability Analysis
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.
- In the past 5 years CDNS always reported a positive cash flow from operatings.
1.2 Ratios
- Looking at the Return On Assets, with a value of 10.92%, CDNS belongs to the top of the industry, outperforming 86.96% of the companies in the same industry.
- CDNS's Return On Equity of 20.26% is amongst the best of the industry. CDNS outperforms 86.96% of its industry peers.
- CDNS has a Return On Invested Capital of 14.48%. This is amongst the best in the industry. CDNS outperforms 92.03% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for CDNS is significantly above the industry average of 10.72%.
| 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
- CDNS has a Profit Margin of 20.94%. This is amongst the best in the industry. CDNS outperforms 87.32% of its industry peers.
- 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 94.93% of the companies in the same industry.
- CDNS's Operating Margin has improved in the last couple of years.
- CDNS has a Gross Margin of 86.36%. This is amongst the best in the industry. CDNS outperforms 92.39% 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 | 31.36% | ||
| 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.
- The number of shares outstanding for CDNS has been reduced compared to 1 year ago.
- 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 12.87. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 12.87, CDNS belongs to the top of the industry, outperforming 94.20% of the companies in the same industry.
- 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.
- Looking at the Debt to FCF ratio, with a value of 1.56, CDNS is in the better half of the industry, outperforming 70.29% of the companies in the same industry.
- 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 64.86% 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 | 12.87 |
ROIC/WACC1.31
WACC11.07%
2.3 Liquidity
- A Current Ratio of 2.86 indicates that CDNS has no problem at all paying its short term obligations.
- CDNS's Current ratio of 2.86 is fine compared to the rest of the industry. CDNS outperforms 72.46% of its industry peers.
- A Quick Ratio of 2.67 indicates that CDNS has no problem at all paying its short term obligations.
- CDNS has a better Quick ratio (2.67) than 71.38% 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.
- The Earnings Per Share has been growing by 20.68% on average over the past years. This is a very strong growth
- Looking at the last year, CDNS shows a quite strong growth in Revenue. The Revenue has grown by 14.12% in the last year.
- 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
- The Earnings Per Share is expected to grow by 14.49% on average over the next years. This is quite good.
- 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 Y15.05%
EPS Next 2Y14.83%
EPS Next 3Y12.44%
EPS Next 5Y14.49%
Revenue Next Year12.49%
Revenue Next 2Y12.42%
Revenue Next 3Y11.73%
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
- CDNS is valuated quite expensively with a Price/Earnings ratio of 41.59.
- 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 26.29.
- CDNS is valuated quite expensively with a Price/Forward Earnings ratio of 36.15.
- CDNS's Price/Forward Earnings is on the same level as the industry average.
- CDNS is valuated rather expensively when we compare the Price/Forward Earnings ratio to 24.57, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.59 | ||
| Fwd PE | 36.15 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, CDNS is valued a bit cheaper than 61.23% of the companies in the same industry.
- The rest of the industry has a similar Price/Free Cash Flow ratio as CDNS.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 50.93 | ||
| EV/EBITDA | 42.76 |
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 12.44% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.76
PEG (5Y)2.01
EPS Next 2Y14.83%
EPS Next 3Y12.44%
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
296.94
-2.9 (-0.97%)
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 Cap81.92B
Revenue(TTM)5.30B
Net Income(TTM)1.11B
Analysts83.13
Price Target379.71 (27.87%)
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)-2.52%
PT rev (3m)-2.4%
EPS NQ rev (1m)6.96%
EPS NQ rev (3m)6.98%
EPS NY rev (1m)-0.01%
EPS NY rev (3m)0.26%
Revenue NQ rev (1m)4.34%
Revenue NQ rev (3m)4.41%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.59 | ||
| Fwd PE | 36.15 | ||
| P/S | 15.26 | ||
| P/FCF | 50.93 | ||
| P/OCF | 46.75 | ||
| P/B | 14.77 | ||
| P/tB | 40.28 | ||
| EV/EBITDA | 42.76 |
EPS(TTM)7.14
EY2.4%
EPS(NY)8.21
Fwd EY2.77%
FCF(TTM)5.83
FCFY1.96%
OCF(TTM)6.35
OCFY2.14%
SpS19.46
BVpS20.11
TBVpS7.37
PEG (NY)2.76
PEG (5Y)2.01
Graham Number56.84
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 | 12.87 |
F-Score7
WACC11.07%
ROIC/WACC1.31
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 Y15.05%
EPS Next 2Y14.83%
EPS Next 3Y12.44%
EPS Next 5Y14.49%
Revenue 1Y (TTM)14.12%
Revenue growth 3Y14.14%
Revenue growth 5Y14.57%
Sales Q2Q%6.2%
Revenue Next Year12.49%
Revenue Next 2Y12.42%
Revenue Next 3Y11.73%
Revenue Next 5Y12.98%
EBIT growth 1Y19.58%
EBIT growth 3Y16.1%
EBIT growth 5Y20.74%
EBIT Next Year21.92%
EBIT Next 3Y16.03%
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.