SNPS gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. SNPS has an excellent profitability rating, 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

In the past year SNPS was profitable.
In the past year SNPS had a positive cash flow from operations.
In the past 5 years SNPS has always been profitable.
Each year in the past 5 years SNPS had a positive operating cash flow.

1.2 Ratios

The Return On Assets of SNPS (2.76%) is better than 64.03% of its industry peers.
Looking at the Return On Equity, with a value of 4.70%, SNPS is in the better half of the industry, outperforming 67.27% of the companies in the same industry.
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.
Measured over the past 3 years, the Average Return On Invested Capital for SNPS is below the industry average of 10.74%.
The 3 year average ROIC (8.72%) for SNPS is well above the current ROIC(1.62%). The reason for the recent decline needs to be investigated.

		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

SNPS has a better Profit Margin (18.89%) 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.
Looking at the Gross Margin, with a value of 76.98%, SNPS is in the better half of the industry, outperforming 72.66% of the companies in the same industry.
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

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), SNPS is destroying value.
SNPS has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, SNPS has more shares outstanding
SNPS has a worse debt/assets ratio than last year.

2.2 Solvency

SNPS has an Altman-Z score of 3.45. This indicates that SNPS is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of SNPS (3.45) is better than 64.75% of its industry peers.
A Debt/Equity ratio of 0.48 indicates that SNPS is not too dependend on debt financing.
SNPS's Debt to Equity ratio of 0.48 is on the low side compared to the rest of the industry. SNPS is outperformed by 65.11% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.48
Debt/FCF	N/A
Altman-Z	3.45

ROIC/WACC0.15

WACC11%

2.3 Liquidity

SNPS has a Current Ratio of 1.62. This is a normal value and indicates that SNPS is financially healthy and should not expect problems in meeting its short term obligations.
SNPS's Current ratio of 1.62 is in line compared to the rest of the industry. SNPS outperforms 50.00% of its industry peers.
SNPS has a Quick Ratio of 1.52. This is a normal value and indicates that SNPS is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of SNPS (1.52) is comparable to the rest of the 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

SNPS shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -1.67%.
The Earnings Per Share has been growing by 18.54% on average over the past years. This is quite good.
The Revenue has grown by 15.12% in the past year. This is quite good.
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

The Earnings Per Share is expected to grow by 14.48% on average over the next years. This is quite good.
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

A Price/Earnings ratio of 38.60 indicates a quite expensive valuation of SNPS.
SNPS's Price/Earnings ratio is in line with the industry average.
The average S&P500 Price/Earnings ratio is at 27.21. SNPS is valued slightly more expensive when compared to this.
With a Price/Forward Earnings ratio of 34.24, SNPS can be considered very expensive at the moment.
SNPS's Price/Forward Earnings ratio is in line with the industry average.
When comparing the Price/Forward Earnings ratio of SNPS to the average of the S&P500 Index (25.98), we can say SNPS is valued slightly more expensively.

		Industry Rank	Sector Rank
PE	38.6
Fwd PE	34.24

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as SNPS.

		Industry Rank	Sector Rank
P/FCF	N/A
EV/EBITDA	67.29

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 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.