Cadence Design Systems Inc
Exchange: NASDAQSector: TechnologyIndustry: Software - Application
Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary electronic products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For nine years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For.
Current Price
$347.24
-1.59%GoodMoat Value
$158.58
54.3% overvaluedProfile
Valuation (TTM)
Market Cap$94.68B
P/E80.85
EV$79.10B
P/B17.29
Shares Out272.65M
P/Sales17.12
Revenue$5.53B
EV/EBITDA48.57
Cadence Design Systems Inc (CDNS) Stock Analysis
GoodMoat Analysis
Cadence Design Systems is a high-quality, moat-protected leader in electronic design automation (EDA) software, essential for creating advanced semiconductors. However, its current valuation appears extremely high, trading at a significant premium to the GoodMoat target price and a P/E of 69x.
Read full analysis
Cadence Design Systems (CDNS) provides critical electronic design automation (EDA) software, intellectual property, and hardware used to design and verify complex semiconductor chips and electronic systems. Applying the GoodMoat framework, the business likely possesses a durable moat, scoring high on criteria like switching costs (its tools are mission-critical and deeply integrated into customer workflows), technology leadership (a top player in a consolidated, high-barrier market), and niche dominance in essential EDA software. Its financials show strong quality indicators, including a robust 28.2% operating margin and a solid 20.3% ROE. However, the valuation assessment presents a major hurdle. At $281.39, the stock trades at a P/E of 69x and is 78% above the GoodMoat target of $158.58, suggesting a deeply unfavourable margin of safety. Revenue growth of 6.2% YoY does not justify such a high multiple. Following the Decision Framework, while the company likely passes the Moat & Quality Gate, it fails the Valuation & Risk Gate. The extreme valuation relative to growth and the target price is a High Confidence Red Flag. For a value investor, this indicates the stock is priced for near-perfect future execution, leaving no room for error and a very thin margin of safety. Analysis based on data as of 2024-05-15.
Market Cap$94.68B
Current Price$347.24
P/E Ratio80.85
Forward P/E—
PEG Ratio3.71
EPS$4.06
Book Value$20.08
P/B Ratio17.29
CDNS Financial Charts
FCF vs CAPEX
FCFCAPEX
Forward estimates use 15.9% FCF growth (CAGR)
Cash vs Debt
Net Cash: 521M
Revenue
2.3B
FY19
2.7B
FY21
3.0B
FY22
3.6B
FY22
4.1B
FY23
4.6B
FY24
5.3B
FY25
Net Income
989M
FY19
591M
FY21
696M
FY22
849M
FY22
1.0B
FY23
1.1B
FY24
1.1B
FY25
CDNS 52-Week Range
$265.66
$373.37
50-Day MA: $309.26200-Day MA: $322.81
Did you know?
CDNS's revenue grew at a 14.6% CAGR over the last 6 years.
Cadence Design Systems Inc (CDNS) Financial Summary
Cadence Design Systems Inc (CDNS) is a Technology company in the Software - Application industry, listed on NASDAQ. The stock currently trades at $347.24 with a market capitalization of $94.68B.
Key valuation metrics include a P/E ratio of 80.85, price-to-book ratio of 17.29, and EPS of $4.06. The company reports a profit margin of 21.2% and return on equity of 21.4%.
CDNS Key Financial Metrics
| Metric | Value |
|---|---|
| Market Cap | $94.68B |
| P/E Ratio | 80.85 |
| EPS | $4.06 |
| P/B Ratio | 17.29 |
| P/S Ratio | 17.12 |
| EV/EBITDA | 48.57 |
| Profit Margin | 21.2% |
| Return on Equity | 21.4% |
| Debt/Equity | 0.45 |
CDNS Revenue & Earnings History
| Year | Revenue | Net Income |
|---|---|---|
| FY19 | $2.34B | $988.98M |
| FY21 | $2.68B | $590.64M |
| FY22 | $2.99B | $695.96M |
| FY22 | $3.56B | $695.96M |
| FY23 | $4.09B | $1.04B |
| FY24 | $4.64B | $1.06B |
| FY25 | $5.30B | $1.11B |
Cadence Design Systems Inc (CDNS) Valuation
Based on GoodMoat's DCF model, Cadence Design Systems Inc has a fair value estimate of $158.58. At the current price of $347.24, the stock appears 119.0% overvalued relative to our intrinsic value estimate.
CDNS Quality Indicators
Cadence Design Systems Inc maintains a profit margin of 21.2% and an operating margin of 28.2%. Return on equity stands at 21.4%. The current ratio is 2.86. Debt-to-equity ratio is 0.45.
About Cadence Design Systems Inc
Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary electronic products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For nine years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For.
CDNS Free Cash Flow
Cadence Design Systems Inc generated $1.59B in trailing twelve-month free cash flow, representing an FCF yield of 1.68%. This low FCF yield may reflect heavy reinvestment or growth spending.
CDNS Shares Outstanding
Cadence Design Systems Inc has 0.27 billion shares outstanding at a share price of $347.24, giving it a market capitalization of $94.68B.
CDNS Recent Insider Trades
Recent insider transactions at Cadence Design Systems Inc include:
| Insider | Type | Shares | Value |
|---|---|---|---|
| WALL JOHN M (Sr. VP & CFO) | SELL | 412 | $142832.16 |
| Cunningham Paul (Sr. Vice President) | SELL | 1,000 | $337490.00 |
| Scannell Paul (Sr. Vice President) | SELL | 10,500 | $3.56M |