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 276 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. These ratings would make CDNS suitable 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.
- Each year in the past 5 years CDNS had a positive operating cash flow.
1.2 Ratios
- The Return On Assets of CDNS (10.92%) is better than 86.96% of its industry peers.
- CDNS has a better Return On Equity (20.26%) than 86.96% of its industry peers.
- CDNS has a better Return On Invested Capital (14.48%) than 92.03% of its industry peers.
- CDNS had an Average Return On Invested Capital over the past 3 years of 17.13%. This 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
- Looking at the Profit Margin, with a value of 20.94%, CDNS belongs to the top of the industry, outperforming 87.32% of the companies in the same industry.
- CDNS's Profit Margin has been stable in the last couple of years.
- The Operating Margin of CDNS (31.36%) is better than 94.93% of its industry peers.
- In the last couple of years the Operating Margin of CDNS has grown nicely.
- The Gross Margin of CDNS (86.36%) is better than 92.39% of its industry peers.
- CDNS's Gross Margin has been stable in the last couple of years.
| 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
- With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CDNS is creating some value.
- CDNS has less shares outstanding than it did 1 year ago.
- 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
- An Altman-Z score of 12.87 indicates that CDNS is not in any danger for bankruptcy at the moment.
- CDNS's Altman-Z score of 12.87 is amongst the best of the industry. CDNS outperforms 94.20% of its industry peers.
- 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.
- With a Debt to Equity ratio value of 0.45, CDNS is not doing good in the industry: 64.86% of the companies in the same industry are doing better.
- 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
WACC11.05%
2.3 Liquidity
- A Current Ratio of 2.86 indicates that CDNS has no problem at all paying its short term obligations.
- CDNS has a better Current ratio (2.86) than 72.46% of its industry peers.
- 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.
- Looking at the Quick ratio, with a value of 2.67, CDNS is in the better half of the industry, outperforming 71.38% of the companies in the same industry.
| 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.
- CDNS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.68% yearly.
- CDNS shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.12%.
- 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
- Based on estimates for the next years, CDNS will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.49% on average per year.
- The Revenue is expected to grow by 12.98% on average over the next years. This is quite good.
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
- The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
- The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. CDNS Valuation Analysis
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 41.59, CDNS can be considered very expensive at the moment.
- The rest of the industry has a similar Price/Earnings ratio as CDNS.
- CDNS is valuated expensively when we compare the Price/Earnings ratio to 26.29, which is the current average of the S&P500 Index.
- With a Price/Forward Earnings ratio of 36.15, CDNS can be considered very expensive at the moment.
- CDNS's Price/Forward Earnings ratio is in line with the industry average.
- When comparing the Price/Forward Earnings ratio of CDNS to the average of the S&P500 Index (24.57), we can say CDNS is valued slightly more expensively.
| 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 the industry average as 61.23% of the companies are valued more expensively.
- 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.
- CDNS has an outstanding profitability rating, which may justify a higher PE ratio.
- A more expensive valuation may be justified as CDNS's earnings are expected to grow with 12.44% in the coming years.
PEG (NY)2.76
PEG (5Y)2.01
EPS Next 2Y14.83%
EPS Next 3Y12.44%
5. CDNS Dividend Analysis
5.1 Amount
- CDNS does not give a dividend.
| 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 Owners91.74%
Inst Owner Change3.04%
Ins Owners0.25%
Ins Owner Change-1.5%
Market Cap80.83B
Revenue(TTM)5.30B
Net Income(TTM)1.11B
Analysts81.88
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
WACC11.05%
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.