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Synopsys Inc SNPS

Morningstar Rating
$587.40 +1.10 (0.19%)
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Company Report

Synopsys Earnings: The Firm Focuses on AI-Fueled Growth and Sells Its Software Integrity Business

We maintained our $480 fair value estimate for narrow-moat Synopsys after the firm posted fiscal second-quarter results with revenue below our expectations, while the non-GAAP operating margin was above our estimate. In the quarter, Synopsys entered into a definitive agreement to sell its software integrity business to Clearlake Capital for over $2.1 billion, which we view as strategically sound. With this, management adjusted its full-year guidance for removing the segment and still expects strong performance throughout the year. In our view, Synopsys is executing well on deploying its artificial intelligence applications across customer workflows, which we think will be the key ingredient in propelling chip design productivity. We continue to view shares, which were flat after-hours, as overvalued.

Price vs Fair Value

SNPS is trading at a 70% premium.
Price
$587.40
Fair Value
$556.00
Uncertainty
High
1-Star Price
$658.00
5-Star Price
$638.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

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

Bears

Customer concentration and interoperability of EDA tools pose a risk that influential customers could switch to a different vendor with relative ease, which could impact long-term growth.

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News

Trading Information

Previous Close Price
$586.30
Day Range
$580.00594.61
52-Week Range
$409.84629.38
Bid/Ask
$587.01 / $590.00
Market Cap
$89.99 Bil
Volume/Avg
725,828 / 905,303

Key Statistics

Price/Earnings (Normalized)
46.58
Price/Sales
15.09
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.41%

Company Profile

Synopsys is a provider of electronic design automation software, intellectual property, and software integrity products. EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution. The firm’s growing SI business allows customers to continuously manage and test the code base for security and quality. Synopsys’ 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 chip design. The resulting expansion in EDA customers alongside secular digitalization of various end markets benefits EDA vendors like Synopsys.
Sector
Technology
Industry
Software - Infrastructure
Stock Style Box
Large Growth
Total Number of Employees
20,300

Competitors

Valuation

Metric
SNPS
SIE
CDNS
Price/Earnings (Normalized)
46.5817.6458.56
Price/Book Value
12.583.0322.48
Price/Sales
15.091.8219.72
Price/Cash Flow
41.2112.3356.30
Price/Earnings
SNPS
SIE
CDNS

Financial Strength

Metric
SNPS
SIE
CDNS
Quick Ratio
0.991.070.96
Current Ratio
1.861.411.32
Interest Coverage
180.625.7535.75
Quick Ratio
SNPS
SIE
CDNS

Profitability

Metric
SNPS
SIE
CDNS
Return on Assets (Normalized)
19.21%4.09%25.27%
Return on Equity (Normalized)
31.21%12.81%43.05%
Return on Invested Capital (Normalized)
27.56%5.07%35.56%
Return on Assets
SNPS
SIE
CDNS
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