CDNS

Cadence Design Systems

Fundamental data last updated:April 13, 2026

company profile

SECTOR

Technology

industry

Software - Application

Exchange

Nasdaq

County of HQ

United States

Next Earnings Date

04/27/26

Business Summary

Cadence Design Systems develops high-end software used to design semiconductors and complex electronic systems, embedding itself directly into customers’ product development lifecycles. Its tools become mission-critical infrastructure, creating high switching costs once integrated into engineering workflows. The company generates recurring cash flow through software licensing and long-term customer relationships, which support its 20.30% operating margin profile. Its moat is built on technical depth, ecosystem entrenchment, and the escalating complexity of chip design that continuously raises barriers to entry.

VALUATION

P/E

65.4

Market Cap ($M USD)

$73,346

Forward P/E

28.2

PEG

2.7

PRICE TO SALES

13.7

PRICE TO BOOK

13.4

EV / EBITDA

38.9

5-Year Average P/E

DIVIDEND

Yield

-

Annual Payout

-

Payout Ratio

-

Consecutive Years of Dividend Growth

0

5-Year Dividend Growth Rate

-

Financial Health & Profitability

Earnings Per Share

$4.09

Next Year EPS Growth Estimate

$9.41

Next Year Revenue Growth Estimate

12.80%

Return on Equity (ROE)

20.30%

Operating Margin

31.20%

Debt-to-Equity

0.5

Piotroski F-Score

6

Altman Z-Score

11.8

Return on Invested Capital (ROIC)

14.60%%

Current Ratio

2.9

Quick Ratio

Gainseekers Quantitative Analysis

Summary

CDNS trades at a premium multiple with a P/E of 65.4 and Price/Sales of 13.7, but the compression to a 28.2 Forward P/E signals strong earnings acceleration expectations. A PEG of 2.7 suggests the market is paying up relative to growth, so this is not statistically cheap on a GARP basis. However, the Altman Z-Score of 11.8 indicates extremely low bankruptcy risk, and a 2.9 current ratio reinforces balance sheet stability. This is a high-quality compounder priced for execution perfection—financially safe, but valuation leaves little room for operational missteps.

AI Exposure / Tech Reliance

As a Software – Application company in the Technology sector, CDNS sits directly in the design infrastructure layer that underpins AI-driven hardware and system complexity. AI proliferation increases chip design complexity, which structurally benefits advanced software tool providers. The company is positioned as an enabling backbone rather than a speculative AI application layer, giving it resilience across tech cycles.

The Bull Case

A GARP-oriented investor would focus on the 14.60% ROIC and 20.30% operating margin, which signal a capital-light, high-efficiency operating model. Return on Equity at 12.80% combined with a Piotroski F-Score of 6 indicates fundamentally sound operations without distress signals. The Forward P/E of 28.2 relative to the trailing 65.4 suggests earnings inflection, and with a modest Debt/Equity of 31.20% and strong liquidity via a 2.9 current ratio, the balance sheet supports reinvestment. This is a financially durable compounder with strong institutional participation (Institutional Ownership % listed at $374.95), positioning it as a core long-duration technology holding.

The Bear Case

The valuation remains the core structural risk: a 65.4 P/E and 13.7 Price/Sales ratio imply extreme optimism. A PEG of 2.7 indicates growth is not cheap relative to price, meaning any deceleration could trigger multiple compression. Debt/Equity at 31.20% is manageable but removes some balance sheet optionality if growth stalls. With a minimal TTM Yield of 0.5 and no meaningful dividend policy, investors are fully dependent on sustained growth and multiple support, making the stock vulnerable to sentiment shifts.

Market Sentiment & Smart Money

Short Interest %

2.30%

Analyst Consensus

1.39

Average Analyst Price Target

$374.95

Institutional Ownership %

90.00%

1-Year Beta

1.45

Insider Buying % (6 Mo)

0.40%%

Distance to 52-Week High

70.60%%

Distance to 52-Week Low

107.30%%