Cadence Design Systems Inc (CDNS) stock analysis
Close on Nov 11, 2026Market cap $90.34BP/E 65.5Yield –
StockData Score
Prices as of Nov 11, 2026How the score works
Solid16 of 30 checks passed
Cadence Design Systems passes 16 of the 30 checks behind our score; 7 could not be run for lack of data and count as not passed. Each dot in the shape is one check — hover it for the numbers.
- Valuation
- 2/6
- Growth
- 4/6
- Past performance
- 5/6
- Financial health
- 5/6
- Dividend
- 0/6
What stands out
Return on equity over 15%
Return on equity was 22.9% over the last twelve months and averaged 27.9% over five years.
Return on capital over 10%
Return on invested capital was 25.7%, above the 10% that usually covers the cost of capital.
Low debt
Debt is 36.1% of shareholders' equity, under the 40% we consider low.
Earnings grew over 5 years
Net income grew 13.4% a year on average over the last five fiscal years.
What to watch
Margin of safety under 20%
The price is 40.9% above fair value, so there is no margin of safety.
Trading above fair value
The share price of $329.26 is above our fair value estimate of $233.61.
EPS growing under 10% a year
Diluted EPS grew 9.5% a year over the last three fiscal years.
P/E above the industry
Cadence Design Systems's P/E of 65.5 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 27.6.
Valuation2/6
P/E below its 5-year median
Cadence Design Systems's P/E of 65.5 is below its own 5-year median of 73.0.
P/E above the industry
Cadence Design Systems's P/E of 65.5 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 27.6.
EV/EBITDA below its 5-year median
Cadence Design Systems's EV/EBITDA of 42.3 is below its 5-year median of 50.4.
P/B above the industry
Cadence Design Systems's price-to-book of 13.14 is above the Computer Programming, Data Processing, and Other Computer Related Services median of 3.32.
Trading above fair value
The share price of $329.26 is above our fair value estimate of $233.61.
Margin of safety under 20%
The price is 40.9% above fair value, so there is no margin of safety.
Growth4/6
Revenue growing 10%+ a year
Revenue grew 14.1% a year over the last three fiscal years.
EPS growing under 10% a year
Diluted EPS grew 9.5% a year over the last three fiscal years.
Earnings growth accelerating
Net income grew 30.1% over the last twelve months, against a 5-year average of 13.4% a year.
Growing faster than the industry
Revenue grew 17.6% over the last twelve months; the Computer Programming, Data Processing, and Other Computer Related Services median is 9.6%.
Guidance raised
Cadence Design Systems raised its fiscal year 2026 Revenue outlook on Jul 27, 2026.
Gross margin trend
This company does not report gross profit.
Past performance5/6
Return on equity over 15%
Return on equity was 22.9% over the last twelve months and averaged 27.9% over five years.
Return on capital over 10%
Return on invested capital was 25.7%, above the 10% that usually covers the cost of capital.
Return on equity above the industry
Cadence Design Systems's return on equity of 22.9% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -1.2%.
Earnings grew over 5 years
Net income grew 13.4% a year on average over the last five fiscal years.
Net margin below its 5-year average
Net margin was 22.5% over the last twelve months, against a 5-year average of 23.3%.
Net margin above the industry
Cadence Design Systems's net margin of 22.5% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -4.8%.
Financial health5/6
Low debt
Debt is 36.1% of shareholders' equity, under the 40% we consider low.
Debt trend
Needs a balance sheet from five years ago with positive equity.
Debt covered by cash flow
Operating cash flow over the last twelve months equals 79.2% of total debt.
Interest well covered
Operating income covers interest expense 14.0 times.
Short-term assets cover short-term debts
Current assets are 1.36 times current liabilities.
Low bankruptcy risk
The Altman Z-score is 12.13; above 3 is the safe zone and below 1.8 the distress zone.
Dividend0/6
No dividend
Cadence Design Systems has not paid a dividend in the last twelve months.
Yield against Treasuries
No dividend.
Yield against the market
No dividend.
Dividend stability
No dividend.
Earnings cover
No dividend.
Cash-flow cover
No dividend.
Fair value
How we estimate itOur estimate per share
$233.61
The share price is 41% above this estimate.
| Method | Multiple used | Own 5Y median | Industry median | Value per share | Weight |
|---|---|---|---|---|---|
| P/E | 45.0× | 73.0× | 27.6× | $226.35 | 47% |
| EV/EBITDA | 30.0× | 50.4× | 18.8× | $232.24 | 41% |
| P/B | 10.7× | 17.9× | 3.3× | $267.48 | 12% |
| Earnings powerleft out, too far from the others | 11.7% cost of equity | – | – | $40.95 | – |
| Fair value | $233.61 | 100% | |||
Valuation over time
Using the earnings and balance sheet published at each date, not today's.
- P/E at month end
- Own 5-year median 73.0
- Computer Programming, Data Processing, and Other Computer Related Services median 27.6
An estimate from reported numbers and market multiples, not a price target or investment advice. It can be far off for companies whose profits are about to change sharply.
Market risk
From the past year of daily prices.
Liquidity
Low risk
- Average value traded per day
- $777.79M
- Value traded per 1% price move
- $366.86M
Downside
Low risk
- Typical loss in a bad month
- 14.2%
- Volatility (annualized)
- 42%
- Sharpe ratio, 1 year
- -0.10
- Beta to the S&P 500 (5Y)
- 1.37
Typical bad-month loss, week by week
Margins
Share of revenue, fiscal years 2011 to 2025
Gross margin
Operating margin
Net margin
Growth rates
Compound annual growth to fiscal 2025
| Per year | 1 year | 3 years | 5 years | 10 years | Five-year pace |
|---|---|---|---|---|---|
| Revenue | +14.1% | +14.1% | +14.6% | +12.0% | |
| Operating income | +10.5% | +11.6% | +18.2% | +18.0% | |
| Net income | +5.1% | +9.3% | +13.4% | +16.0% | |
| EPS, diluted | +5.5% | +9.5% | +14.0% | +17.5% | |
| Free cash flow | +41.9% | +12.4% | +14.4% | +16.9% |
Returns and balance sheet
10 fiscal years. Hover a measure to see how it is calculated.
| Measure | FY2016 | FY2020 | FY2025 | Trend |
|---|---|---|---|---|
| Return on equity | 19.2% | 25.7% | 21.9% | |
| Return on assets | 9.1% | 16.2% | 11.6% | |
| Current ratio | 1.20 | 1.86 | 2.86 | |
| Interest coverage | 10.3× | 31.1× | 12.8× | |
| Capex to revenue | 3.0% | 3.5% | 2.7% | |
| Diluted shares | 291M | 280M | 273M |
Where the cash went
Fiscal 2021 to 2025, five years combined
Cadence Design Systems generated $6.68B from operations and spent $4.41B on capital expenditure, dividends and share buybacks. 13% of that went back into the business.
DuPont analysis
Return on equity split into margin, efficiency and leverage
| Fiscal year | Net margin | Asset turnover | Equity multiplier | Return on equity |
|---|---|---|---|---|
| FY2025 | 20.9% | 0.55× | 1.88× | 21.9% |
| FY2024 | 22.7% | 0.63× | 1.81× | 26.1% |
| FY2023 | 25.5% | 0.76× | 1.76× | 33.9% |
| FY2022 | 23.8% | 0.75× | 1.74× | 31.0% |
| FY2021 | 23.3% | 0.72× | 1.59× | 26.6% |
| FY2020 | 22.0% | 0.73× | 1.59× | 25.7% |
| FY2019 | 42.3% | 0.80× | 1.72× | 58.3% |
| FY2018 | 16.2% | 0.87× | 2.15× | 30.4% |
| FY2017 | 10.5% | 0.86× | 2.61× | 23.6% |
| FY2016 | 11.2% | 0.82× | 2.10× | 19.2% |
Piotroski F-Score
Nine tests of profitability, balance sheet and efficiency, fiscal 2025 against fiscal 2024
- ProfitableNet income above zero$1.11B
- Cash generatingOperating cash flow above zero$1.73B
- Return on assets improvedROA up on the prior year18.6% → 12.4%
- Earnings backed by cashOperating cash flow above net income$1.73B vs $1.11B
- Less leverageLong-term debt to assets fell– → 24.4%
- Better liquidityCurrent ratio rose2.93 → 2.86
- No dilutionShare count did not rise274M → 273M
- Gross margin improvedGross margin up on the prior year– → –
- More efficientAsset turnover rose0.82 → 0.59
See a number that looks wrong?