CADENCE DESIGN SYS INC (CDNS) Stock Fundamental Analysis
NASDAQ:CDNS - Nasdaq - US1273871087 - Common Stock
CDNS gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 285 industry peers in the Software industry. CDNS scores excellent points on both the profitability and health parts. This is a solid base for a good stock. CDNS shows excellent growth, but is valued quite expensive already. This makes CDNS very considerable for growth and quality 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.
CDNS had positive earnings in each of the past 5 years.
In the past 5 years CDNS always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of CDNS (11.34%) is better than 89.25% of its industry peers.
CDNS's Return On Equity of 22.77% is amongst the best of the industry. CDNS outperforms 88.17% of its industry peers.
With an excellent Return On Invested Capital value of 13.77%, CDNS belongs to the best of the industry, outperforming 91.40% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for CDNS is significantly above the industry average of 12.12%.
The last Return On Invested Capital (13.77%) for CDNS is well below the 3 year average (22.10%), which needs to be investigated, but indicates that CDNS had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.34% | ||
| ROE | 22.77% | ||
| ROIC | 13.77% |
ROA(3y)16.92%
ROA(5y)19.03%
ROE(3y)28.97%
ROE(5y)31.53%
ROIC(3y)22.1%
ROIC(5y)19.66%
1.3 Margins
CDNS has a better Profit Margin (23.87%) than 90.68% of its industry peers.
In the last couple of years the Profit Margin of CDNS has grown nicely.
With an excellent Operating Margin value of 29.17%, CDNS belongs to the best of the industry, outperforming 94.98% of the companies in the same industry.
In the last couple of years the Operating Margin of CDNS has grown nicely.
CDNS's Gross Margin of 87.79% is amongst the best of the industry. CDNS outperforms 93.55% 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 | 29.17% | ||
| PM (TTM) | 23.87% | ||
| GM | 87.79% |
OM growth 3Y8.48%
OM growth 5Y10.34%
PM growth 3Y4.96%
PM growth 5Y9.5%
GM growth 3Y0.28%
GM growth 5Y0.33%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so CDNS is creating value.
Compared to 1 year ago, CDNS has less shares outstanding
The number of shares outstanding for CDNS has been reduced compared to 5 years ago.
CDNS has a better debt/assets ratio than last year.
2.2 Solvency
CDNS has an Altman-Z score of 13.04. This indicates that CDNS is financially healthy and has little risk of bankruptcy at the moment.
CDNS has a Altman-Z score of 13.04. This is amongst the best in the industry. CDNS outperforms 88.17% of its industry peers.
The Debt to FCF ratio of CDNS is 2.97, which is a good value as it means it would take CDNS, 2.97 years of fcf income to pay off all of its debts.
CDNS's Debt to FCF ratio of 2.97 is fine compared to the rest of the industry. CDNS outperforms 62.72% of its industry peers.
A Debt/Equity ratio of 0.54 indicates that CDNS is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.54, CDNS is not doing good in the industry: 68.82% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.54 | ||
| Debt/FCF | 2.97 | ||
| Altman-Z | 13.04 |
ROIC/WACC1.23
WACC11.17%
2.3 Liquidity
A Current Ratio of 2.45 indicates that CDNS has no problem at all paying its short term obligations.
The Current ratio of CDNS (2.45) is better than 68.10% of its industry peers.
CDNS has a Quick Ratio of 2.27. This indicates that CDNS is financially healthy and has no problem in meeting its short term obligations.
CDNS has a Quick ratio of 2.27. This is in the better half of the industry: CDNS outperforms 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.45 | ||
| Quick Ratio | 2.27 |
3. Growth
3.1 Past
CDNS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.64%, 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 22.59% on average per year.
Looking at the last year, CDNS shows a quite strong growth in Revenue. The Revenue has grown by 11.03% in the last year.
The Revenue has been growing by 13.85% on average over the past years. This is quite good.
EPS 1Y (TTM)15.64%
EPS 3Y22.67%
EPS 5Y22.59%
EPS Q2Q%30.16%
Revenue 1Y (TTM)11.03%
Revenue growth 3Y15.09%
Revenue growth 5Y13.85%
Sales Q2Q%18.81%
3.2 Future
The Earnings Per Share is expected to grow by 14.31% on average over the next years. This is quite good.
The Revenue is expected to grow by 13.30% on average over the next years. This is quite good.
EPS Next Y17.25%
EPS Next 2Y16.5%
EPS Next 3Y15.92%
EPS Next 5Y14.31%
Revenue Next Year13.49%
Revenue Next 2Y13.47%
Revenue Next 3Y13.05%
Revenue Next 5Y13.3%
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. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 56.85, the valuation of CDNS can be described as expensive.
Compared to the rest of the industry, the Price/Earnings ratio of CDNS is on the same level as its industry peers.
CDNS is valuated expensively when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
CDNS is valuated quite expensively with a Price/Forward Earnings ratio of 44.49.
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 24.44, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.85 | ||
| Fwd PE | 44.49 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CDNS is valued a bit cheaper than the industry average as 66.31% of the companies are valued more expensively.
CDNS's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 89.58 | ||
| EV/EBITDA | 57.81 |
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.
CDNS has an outstanding profitability rating, which may justify a higher PE ratio.
CDNS's earnings are expected to grow with 15.92% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.3
PEG (5Y)2.52
EPS Next 2Y16.5%
EPS Next 3Y15.92%
5. Dividend
5.1 Amount
No dividends for CDNS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
CADENCE DESIGN SYS INC
NASDAQ:CDNS (1/21/2025, 8:00:02 PM)
After market: 312.67 +1.7 (+0.55%)310.97
+5.37 (+1.76%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.83%
Inst Owner Change-0.06%
Ins Owners0.17%
Ins Owner Change-1.49%
Market Cap85.29B
Analysts80
Price Target327.1 (5.19%)
Short Float %1.65%
Short Ratio2.77
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)7.06%
Min EPS beat(2)2.55%
Max EPS beat(2)11.57%
EPS beat(4)4
Avg EPS beat(4)4.36%
Min EPS beat(4)1.41%
Max EPS beat(4)11.57%
EPS beat(8)8
Avg EPS beat(8)3.03%
EPS beat(12)12
Avg EPS beat(12)5.02%
EPS beat(16)16
Avg EPS beat(16)5.84%
Revenue beat(2)1
Avg Revenue beat(2)0.33%
Min Revenue beat(2)-0.22%
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)-0.57%
Revenue beat(12)6
Avg Revenue beat(12)0.06%
Revenue beat(16)8
Avg Revenue beat(16)0.09%
PT rev (1m)1.41%
PT rev (3m)-0.89%
EPS NQ rev (1m)0%
EPS NQ rev (3m)2.52%
EPS NY rev (1m)0%
EPS NY rev (3m)0.78%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)5.78%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.25%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.85 | ||
| Fwd PE | 44.49 | ||
| P/S | 19.59 | ||
| P/FCF | 89.58 | ||
| P/OCF | 78.15 | ||
| P/B | 18.69 | ||
| P/tB | 60.59 | ||
| EV/EBITDA | 57.81 |
EPS(TTM)5.47
EY1.76%
EPS(NY)6.99
Fwd EY2.25%
FCF(TTM)3.47
FCFY1.12%
OCF(TTM)3.98
OCFY1.28%
SpS15.88
BVpS16.64
TBVpS5.13
PEG (NY)3.3
PEG (5Y)2.52
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 11.34% | ||
| ROE | 22.77% | ||
| ROCE | 16.95% | ||
| ROIC | 13.77% | ||
| ROICexc | 21.91% | ||
| ROICexgc | 66.53% | ||
| OM | 29.17% | ||
| PM (TTM) | 23.87% | ||
| GM | 87.79% | ||
| FCFM | 21.87% |
ROA(3y)16.92%
ROA(5y)19.03%
ROE(3y)28.97%
ROE(5y)31.53%
ROIC(3y)22.1%
ROIC(5y)19.66%
ROICexc(3y)30.46%
ROICexc(5y)27.16%
ROICexgc(3y)73.15%
ROICexgc(5y)59.61%
ROCE(3y)27.46%
ROCE(5y)24.35%
ROICexcg growth 3Y31%
ROICexcg growth 5Y5.15%
ROICexc growth 3Y13.79%
ROICexc growth 5Y7.14%
OM growth 3Y8.48%
OM growth 5Y10.34%
PM growth 3Y4.96%
PM growth 5Y9.5%
GM growth 3Y0.28%
GM growth 5Y0.33%
F-Score5
Asset Turnover0.47
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.54 | ||
| Debt/FCF | 2.97 | ||
| Debt/EBITDA | 1.71 | ||
| Cap/Depr | 77.04% | ||
| Cap/Sales | 3.2% | ||
| Interest Coverage | 26.42 | ||
| Cash Conversion | 75.23% | ||
| Profit Quality | 91.61% | ||
| Current Ratio | 2.45 | ||
| Quick Ratio | 2.27 | ||
| Altman-Z | 13.04 |
F-Score5
WACC11.17%
ROIC/WACC1.23
Cap/Depr(3y)70.53%
Cap/Depr(5y)67.48%
Cap/Sales(3y)2.74%
Cap/Sales(5y)2.99%
Profit Quality(3y)133.32%
Profit Quality(5y)120.67%
High Growth Momentum
Growth
EPS 1Y (TTM)15.64%
EPS 3Y22.67%
EPS 5Y22.59%
EPS Q2Q%30.16%
EPS Next Y17.25%
EPS Next 2Y16.5%
EPS Next 3Y15.92%
EPS Next 5Y14.31%
Revenue 1Y (TTM)11.03%
Revenue growth 3Y15.09%
Revenue growth 5Y13.85%
Sales Q2Q%18.81%
Revenue Next Year13.49%
Revenue Next 2Y13.47%
Revenue Next 3Y13.05%
Revenue Next 5Y13.3%
EBIT growth 1Y11.64%
EBIT growth 3Y24.85%
EBIT growth 5Y25.62%
EBIT Next Year23.59%
EBIT Next 3Y18.53%
EBIT Next 5Y12.66%
FCF growth 1Y-12.66%
FCF growth 3Y15.45%
FCF growth 5Y18.07%
OCF growth 1Y-8.62%
OCF growth 3Y14.24%
OCF growth 5Y17.41%