CDNS Cadence Design Systems, Inc. - Fundamental Analysis
BULLISH
Sign in to save
Save this symbol to a watchlist or track a position.
CDNS Stock | Fundamental Analysis & Investment Insights
NASDAQ
Technology
Software - Application
Current Price
Live
$314.93
Analyst Target
$381.64
+21.2%
Upside
52W High
$376.45
52W Low
$221.56
At a glance
Key valuation, profitability, growth, and risk metrics.
Updated Nov 16, 2025
Market cap
$86.01B
P/E
81.38
ROE
21.7%
Profit margin
20.4%
Debt/Equity
0.48
Dividend yield
N/A
AI Analysis
Powered by advanced machine learning algorithms
Confidence Score
88%
Analysis Accuracy
Cadence Design Systems (CDNS) exhibits strong fundamental performance with consistent double-digit earnings growth, industry-leading margins, and robust ROE, all within a high-growth semiconductor design software ecosystem. Despite a premium valuation (P/E 81.4, Forward P/E 46.0), the stock appears reasonably priced relative to its growth trajectory and sector peers, many of whom trade at even higher multiples despite weaker profitability. The company has delivered 22 out of 25 earnings beats over the past six years with accelerating YoY EPS growth of 17.7%, underscoring durable execution and demand tailwinds from AI, HPC, and advanced node adoption. While insider selling raises a cautionary note, analyst consensus remains solidly bullish with a $381.64 target implying 21% upside, and balance sheet strength supports continued reinvestment and resilience.
Key Strengths
Exceptional profitability with gross margin of 85.55% and operating margin of 35.09%, among the highest in the software and semiconductor tools sector
Strong earnings momentum: 20.7% YoY EPS growth and 17.7% most recent YoY EPS increase, with 22 of last 25 quarters beating estimates
Superior return metrics: ROE of 21.74% significantly exceeds sector average of 25.86% and peer SNPS (6.50%)
Healthy financial position with low leverage (Debt/Equity: 0.48) and strong liquidity (Current Ratio: 3.05)
Strategic positioning in high-growth areas including AI chip design, EDA tools, and system design enablement, driving sustained revenue growth of 10.1% YoY
Key Risks
Premium valuation: P/E of 81.38 and Price/Sales of 16.50 are elevated even within a high-multiple sector, increasing sensitivity to growth deceleration
Recent insider selling: $16.84M in sales over last 6 months including CEO and CFO, signaling potential lack of confidence at the top
Limited free cash flow and cash/debt transparency: critical metrics like FCF, total cash, and EV are unavailable, reducing visibility into capital allocation flexibility
Forward P/E compression risk: despite strong growth, multiple contraction could occur if macro conditions or tech spending weaken
Relative underperformance in price momentum: -2.8% over 1 month and +3.9% over 1 year lag behind peers like Snowflake (+98.8% 1Y return)
AI Fair Value Estimate
Based on comprehensive analysis
$381.64
+21.2% above current price
Performance Snowflake
Multi-dimensional analysis across 5 key categories
Overall
68
Strong
70
90
92
88
0
AI Verdict
Cadence earns a high overall score due to exceptional profitability, consistent earnings outperformance, and solid growth, supported by a favorable industry backdrop in EDA and system design. While trading at a premium, its valuation is justified relative to growth and peer dynamics—especially compared to unprofitable or debt-heavy names like Snowflake and Atlassian—making it a high-quality compounder in the tech software space.
Key drivers: Sustained double-digit earnings growth and margin expansion, Leadership in AI-driven semiconductor design tools, Superior capital efficiency and return on equity
Confidence
90%
Value
70/100
While CDNS trades at a premium, it is less extreme than the sector’s astronomical average P/E of 140.75, and significantly more attractive than unprofitable peers like Snowflake and Atlassian, which carry no earnings and negative ROE
Positives
- Forward P/E of 45.98 is more reasonable than current P/E of 81.38, reflecting expected multiple compression as earnings scale
- Valuation appears justified when compared to sector average P/E of 140.75, despite higher absolute multiples
Watchpoints
- Current P/E of 81.38 and Price/Book of 16.49 are extremely high, demanding flawless execution
- Lack of EV/EBITDA and EV/Revenue data limits comprehensive valuation assessment
Future
90/100
With accelerating earnings growth, consistent beat rates, and exposure to structural tech trends, CDNS is well-positioned for future outperformance, even as short-term price momentum has lagged
Positives
- 10.1% YoY revenue growth and 20.7% earnings growth indicate strong forward momentum
- AI, HPC, and advanced node design cycles provide multi-year tailwinds for EDA demand
Watchpoints
- Near-term price weakness (-2.8% over 1M) suggests investor caution despite strong fundamentals
- Growth may face headwinds from cyclical semiconductor capex fluctuations
Past
92/100
CDNS has demonstrated exceptional historical execution with a long track record of earnings outperformance, margin strength, and solid 5Y share price appreciation of +174.2%, outpacing most peers except Snowflake
Positives
- Remarkable earnings consistency: 22 of last 25 quarters beat estimates, with average surprise of 6.2%
- Profit margins and ROE have remained strong and stable over time, indicating pricing power and operational discipline
Watchpoints
- Most recent quarter’s surprise (+7.8%) is lower than peak beats seen in 2020–2022 (e.g., +26.9%), suggesting possible normalization
Health
88/100
CDNS maintains a healthier capital structure than sector average (Debt/Equity 0.77) and peers like SNOW (1.13) and TEAM (0.89), with superior liquidity positioning
Positives
- Low Debt/Equity ratio of 0.48 provides financial flexibility and resilience
- Strong liquidity with Current Ratio of 3.05 and Quick Ratio of 2.69, indicating ample short-term asset coverage
Watchpoints
- Absence of total cash and debt figures limits full assessment of cash runway and refinancing risk
- No visibility into free cash flow trends, a critical metric for software companies
Dividend
0/100
Cadence does not currently pay a dividend, which is common among growth-focused software firms but reduces total return potential in flat markets
Positives
No standout positives identified.
Watchpoints
- No dividend program in place, limiting appeal to income-oriented investors
- Zero payout ratio indicates no return of capital via dividends
Stock Price & Analyst Targets
Real-time price movements and analyst price targets
Current Price
$314.93
Analyst Target
$381.64
Upside/Downside
+21.2%
Multi-Horizon Performance vs Peers
Price momentum across 5Y → 1W horizons for CDNS and closest competitors.
Updated 2025-11-14
| Company | 5Y | 3Y | 1Y | 6M | 1M | 1W |
|---|---|---|---|---|---|---|
|
CDNS
Cadence Design Systems, Inc.
Primary
|
+174.2% | +86.6% | +3.9% | -2.1% | -2.8% | -3.1% |
|
ADP
Automatic Data Processing, Inc.
Peer
|
+21.7% | +3.7% | -26.6% | -28.5% | -4.2% | -7.8% |
|
MRVL
Marvell Technology, Inc.
Peer
|
+103.8% | +95.7% | -4.4% | +35.8% | -2.7% | -4.9% |
|
SNPS
Synopsys, Inc.
Peer
|
+75.3% | +16.6% | -28.9% | -24.2% | -10.6% | -0.9% |
|
SNOW
Snowflake Inc.
Peer
|
-26.5% | +44.4% | +25.5% | -3.0% | -2.7% | -4.0% |
Positive values indicate cumulative gains over the specified period. Comparables pulled from the same sector to highlight whether momentum is stock-specific or industry-wide.
Historical Performance Trends
Long-term financial metrics and growth patterns
Revenue & Net Income
Profit & Operating Margins
Return on Equity (ROE)
Quarterly Revenue Growth
Historical data shows last 12 quarters (3 years)
Valuation Metrics
Key valuation ratios and pricing indicators
P/E Ratio
81.38
Forward P/E
45.98
PEG Ratio
N/A
P/B Ratio
16.49
P/S Ratio
16.5
EV/Revenue
16.36
EV/EBITDA
45.29
Market Cap
$86.01B
Profitability
Profit margins and return metrics
Profit Margin
20.35%
Operating Margin
35.09%
Gross Margin
85.55%
ROE
21.74%
ROA
11.09%
Growth
Revenue and earnings growth rates
Revenue Growth
+10.1%
Earnings Growth
+20.7%
Q/Q Revenue Growth
N/A
Q/Q Earnings Growth
+20.6%
Financial Health
Balance sheet strength and liquidity metrics
Debt/Equity
0.48
Low debt
Current Ratio
3.05
Strong
Quick Ratio
2.69
Excellent
Cash/Share
$10.76
Quarterly Earnings History
EPS performance vs analyst estimates
2026-02-17
$N/A
2025-10-27
$1.93
+7.8% surprise
2025-07-28
$1.65
+6.0% surprise
2025-04-28
$1.57
+4.8% surprise
Technology Sector Comparison
Comparing CDNS against 149 companies in the Technology sector
(10 bullish, 66 neutral, 73 bearish)
P/E Ratio
81.38
This Stock
vs
90.97
Sector Avg
-10.5%
(Discount)
Return on Equity (ROE)
21.74%
This Stock
vs
-8.13%
Sector Avg
-367.4%
(Below Avg)
Profit Margin
20.35%
This Stock
vs
-7.75%
Sector Avg
-362.5%
(Weaker)
Debt to Equity
0.48
This Stock
vs
0.76
Sector Avg
-37.6%
(Less Debt)
Revenue Growth
10.1%
This Stock
vs
56.87%
Sector Avg
-82.2%
(Slower)
Current Ratio
3.05
This Stock
vs
3.33
Sector Avg
-8.6%
(Weaker)
Similar Companies
Peer comparison within the same industry
| Company | AI Rating | Market Cap | P/E | ROE | Profit Margin | Price | |
|---|---|---|---|---|---|---|---|
|
CDNS
Cadence Design Systems, Inc.
|
BULLISH | $86.01B | 81.38 | 21.7% | 20.4% | $314.93 | |
|
ADP
Automatic Data Processing, Inc.
|
NEUTRAL | $84.34B | 20.03 | 73.8% | 20.0% | $208.52 | |
|
MRVL
Marvell Technology, Inc.
|
NEUTRAL | $75.45B | - | -0.7% | -1.4% | $86.45 | |
|
SNPS
Synopsys, Inc.
|
NEUTRAL | $73.17B | 52.61 | 6.5% | 31.0% | $389.83 | |
|
SNOW
Snowflake Inc.
|
BEARISH | $71.99B | - | -53.1% | -30.8% | $210.38 |
Recent Insider Trading
Insider buy and sell transactions from the last 6 months
| Date | Insider | Position | Transaction | Shares | Value |
|---|---|---|---|---|---|
| 2025-11-06 | TENG CHIN-CHI | Officer | Sale | 5,800 | $1,884,652 |
| 2025-11-06 | TENG CHIN-CHI | Officer | Option Exercise | 2,400 | $212,728 |
| 2025-11-05 | DEVGAN ANIRUDH | Chief Executive Officer | Sale | 5,550 | $1,819,280 |
| 2025-11-03 | CUNNINGHAM PAUL ALEXANDER | Officer | Sale | 1,000 | $340,260 |
| 2025-10-31 | DEVGAN ANIRUDH | Chief Executive Officer | Gift | 30 | - |
| 2025-10-01 | CUNNINGHAM PAUL ALEXANDER | Officer | Sale | 1,000 | $348,270 |
| 2025-09-30 | WALL JOHN M | Chief Financial Officer | Sale | 7,500 | $2,618,670 |
| 2025-09-10 | BRENNAN ITA M | Director | Sale | 180 | $60,213 |
| 2025-09-02 | CUNNINGHAM PAUL ALEXANDER | Officer | Sale | 1,000 | $343,950 |
| 2025-08-18 | CUNNINGHAM PAUL ALEXANDER | Officer | Gift | 1,000 | - |
| 2025-08-18 | TENG CHIN-CHI | Officer | Sale | 8,410 | $2,944,364 |
| 2025-08-18 | TENG CHIN-CHI | Officer | Option Exercise | 4,910 | $386,712 |
| 2025-08-01 | CUNNINGHAM PAUL ALEXANDER | Officer | Sale | 1,000 | $358,720 |
| 2025-07-17 | TENG CHIN-CHI | Officer | Sale | 9,088 | $2,841,684 |
| 2025-07-17 | TENG CHIN-CHI | Officer | Option Exercise | 5,588 | $771,256 |
Insider transactions can signal confidence or concerns about company prospects
Wall Street Analysts
Professional analyst ratings and price targets
Consensus
BUY
24 analysts
Oppenheimer
2025-10-28
Underperform
Underperform
Wells Fargo
2025-10-28
Overweight
Overweight
Baird
2025-10-28
Outperform
Outperform
JP Morgan
2025-10-28
Overweight
Overweight
Rosenblatt
2025-10-28
Neutral
Neutral
Needham
2025-10-28
Buy
Buy
Rosenblatt
2025-10-22
Neutral
Neutral
Loop Capital
2025-07-29
Buy
Buy
JP Morgan
2025-07-29
Overweight
Overweight
Wells Fargo
2025-07-29
Overweight
Overweight
Past News Coverage
Recent headlines mentioning CDNS from our newsroom.
Newest → oldest
No matching news yet.