SNPS gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. SNPS scores excellent on profitability, but there are concerns on its financial health. SNPS is quite expensive at the moment. It does show a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

SNPS had positive earnings in the past year.
SNPS had a positive operating cash flow in the past year.
SNPS had positive earnings in each of the past 5 years.
SNPS had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

The Return On Assets of SNPS (2.76%) is better than 63.67% of its industry peers.
SNPS's Return On Equity of 4.70% is fine compared to the rest of the industry. SNPS outperforms 67.27% of its industry peers.
With a decent Return On Invested Capital value of 1.62%, SNPS is doing good in the industry, outperforming 65.47% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for SNPS is below the industry average of 10.73%.
The last Return On Invested Capital (1.62%) for SNPS is well below the 3 year average (8.72%), which needs to be investigated, but indicates that SNPS had better years and this may not be a problem.

		Industry Rank	Sector Rank
ROA	2.76%
ROE	4.7%
ROIC	1.62%

ROA(3y)10.66%

ROA(5y)10.22%

ROE(3y)16.63%

ROE(5y)16.41%

ROIC(3y)8.72%

ROIC(5y)9.91%

1.3 Margins

The Profit Margin of SNPS (18.89%) is better than 81.30% of its industry peers.
SNPS's Profit Margin has been stable in the last couple of years.
SNPS's Operating Margin of 12.97% is fine compared to the rest of the industry. SNPS outperforms 78.06% of its industry peers.
SNPS's Operating Margin has declined in the last couple of years.
The Gross Margin of SNPS (76.98%) is better than 72.66% of its industry peers.
In the last couple of years the Gross Margin of SNPS has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	12.97%
PM (TTM)	18.89%
GM	76.98%

OM growth 3Y-19.79%

OM growth 5Y-5.43%

PM growth 3Y-3.98%

PM growth 5Y0.93%

GM growth 3Y-1.5%

GM growth 5Y-0.37%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so SNPS is destroying value.
Compared to 1 year ago, SNPS has more shares outstanding
The number of shares outstanding for SNPS has been increased compared to 5 years ago.
Compared to 1 year ago, SNPS has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 3.24 indicates that SNPS is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.24, SNPS is in the better half of the industry, outperforming 64.75% of the companies in the same industry.
SNPS has a Debt/Equity ratio of 0.48. This is a healthy value indicating a solid balance between debt and equity.
SNPS has a worse Debt to Equity ratio (0.48) than 65.11% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.48
Debt/FCF	N/A
Altman-Z	3.24

ROIC/WACC0.15

WACC10.97%

2.3 Liquidity

A Current Ratio of 1.62 indicates that SNPS should not have too much problems paying its short term obligations.
SNPS has a Current ratio (1.62) which is in line with its industry peers.
A Quick Ratio of 1.52 indicates that SNPS should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.52, SNPS is in line with its industry, outperforming 46.40% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	1.62
Quick Ratio	1.52

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The earnings per share for SNPS have decreased by -1.67% in the last year.
SNPS shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.54% yearly.
Looking at the last year, SNPS shows a quite strong growth in Revenue. The Revenue has grown by 15.12% in the last year.
SNPS shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 13.87% yearly.

EPS 1Y (TTM)-1.67%

EPS 3Y13.39%

EPS 5Y18.54%

EPS Q2Q%-14.71%

Revenue 1Y (TTM)15.12%

Revenue growth 3Y15.19%

Revenue growth 5Y13.87%

Sales Q2Q%37.83%

3.2 Future

Based on estimates for the next years, SNPS will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.48% on average per year.
SNPS is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.79% yearly.

EPS Next Y12.73%

EPS Next 2Y15.35%

EPS Next 3Y16.34%

EPS Next 5Y14.48%

Revenue Next Year36.66%

Revenue Next 2Y23.03%

Revenue Next 3Y19.06%

Revenue Next 5Y15.79%

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 Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 35.81, SNPS can be considered very expensive at the moment.
SNPS's Price/Earnings ratio is in line with the industry average.
SNPS is valuated rather expensively when we compare the Price/Earnings ratio to 28.32, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 31.76, SNPS can be considered very expensive at the moment.
SNPS's Price/Forward Earnings ratio is in line with the industry average.
SNPS's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	35.81
Fwd PE	31.76

4.2 Price Multiples

SNPS's Enterprise Value to EBITDA is on the same level as the industry average.

		Industry Rank	Sector Rank
P/FCF	N/A
EV/EBITDA	62.9

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates SNPS does not grow enough to justify the current Price/Earnings ratio.
The decent profitability rating of SNPS may justify a higher PE ratio.
SNPS's earnings are expected to grow with 16.34% in the coming years. This may justify a more expensive valuation.