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Cadence Design Systems Inc CDNS

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Stock XNAS Rating as of
$258.79 +0.41 (0.16%)
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As of Delayed Price Closed
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Company Report

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Cadence Design Systems Earnings: Sequential Improvement Boosted by Healthy AI-Based Demand

Brian Colello, Verushka Shetty

We keep our $240 per share fair value estimate for narrow-moat Cadence Design Systems after second-quarter results came in above our expectations. Due to the acquisition of Beta CAE Systems, management adjusted its full-year targets and provided lighter-than-expected third-quarter guidance. Our long-term expectations remain intact as we continue to believe Cadence will benefit from the burgeoning adoption of electronic design automation tools driven by chip demand from artificial intelligence. With shares flattish after hours, we continue to view the stock as overvalued.

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Price vs Fair Value

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CDNS is trading at a 284% premium.
Price
$258.79
Fair Value
$983.00
Uncertainty
High
1-Star Price
$539.00
5-Star Price
$612.00
Economic Moat
Ypdngm
Capital Allocation
Zbgbcplp

Bulls Say, Bears Say

Bulls

Secular tailwinds in chip design such as 5G, Inernet of Things, AI/ML, and others should increase demand for EDA tools and support growth for Cadence.

Bears

Interoperability of EDA tools poses a risk that influential customers could switch to a different vendor with relative ease, which could have an impact on long-term growth.

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Trading Information

Previous Close Price
$258.38
Day Range
$257.78–264.55
52-Week Range
$217.77–328.99
Bid/Ask
$258.05 / $259.95
Market Cap
$70.86 Bil
Volume/Avg
2.6 Mil / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
50.82
Price/Sales
16.98
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
0.76%

Company Profile

Cadence Design Systems is a provider of electronic design automation software, intellectual property, and system design and analysis products. EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution. Cadence offers a portfolio of design IP, as well as system design and analysis products, which enable system-level analysis and verification solutions. Cadence’s comprehensive portfolio is benefiting from a mutual convergence of semiconductor companies moving up-stack toward systems-like companies, and systems companies moving down-stack toward in-house semiconductor design. The resulting expansion in EDA customers, alongside secular digitalization of various end markets, benefits EDA vendors like Cadence.
Sector
Technology
Industry
Software - Application
Stock Style Box
Large Growth
Total Number of Employees
11,200
Website
https://www.cadence.com

Competitors

Valuation

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Metric
CDNS
SIE
ANSS
Price/Earnings (Normalized)
 50.8217.8539.28
Price/Book Value
 16.632.905.04
Price/Sales
 16.981.7512.26
Price/Cash Flow
 49.2711.8136.69
Price/Earnings
CDNS
SIE
ANSS

Financial Strength

Metric
CDNS
SIE
ANSS
Quick Ratio
 1.061.072.70
Current Ratio
 1.431.412.80
Interest Coverage
 32.625.7510.96
Quick Ratio
CDNS
SIE
ANSS

Profitability

Metric
CDNS
SIE
ANSS
Return on Assets (Normalized)
 21.37%4.09%10.66%
Return on Equity (Normalized)
 36.16%12.81%14.30%
Return on Invested Capital (Normalized)
 29.38%5.07%12.56%
Return on Assets
CDNS
SIE
ANSS
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