CDNS

Cadence Design Systems, Inc.

Fundamental data last updated:May 13, 2026

We may earn a commission from partner links. This content is for informational purposes only and is not financial advice. Information may be delayed or inaccurate.

company profile

SECTOR

Technology

industry

Software - Application

Exchange

NASDAQ

County of HQ

US

Next Earnings Date

07/27/2026

Business Summary

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. The company also provides digital IC design and sign off products, including Genus logic synthesis and Joules RTL power solutions, as well as Modus software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and multiple patterning preparation; and signoff products to signoff the design as ready for silicon manufacturing. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system design and analysis products to develop printed circuit boards and IC packages, as well as to analyze electromagnetic, electro-thermal, and other multi-physics effects. Further, the company provides intellectual property (IP) products comprising pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP and memory models to emulate and model the expected behavior and interaction of standard industry system interface protocols. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. The company serves 5G communications, aerospace and defense, automotive, industrial and healthcare, mobile, consumer, and hyperscale computing markets. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.

 


VALUATION

P/E

84.62

Market Cap ($M USD)

$100.45B

Forward P/E

32.66

PEG

0.21

PRICE TO SALES

18.17

PRICE TO BOOK

15.10

EV / EBITDA

54.69

5-Year Average P/E

Free Cash Flow Yield

1.42%

DCF Value

$158.18

Graham Number

$48.33

Price to FCF

70.25

EV to FCF

71.42

Earnings Yield

1.18%

FCF Yield

1.42%

DIVIDEND

Yield

0.00%

Annual Payout

$0.00

Payout Ratio

0.00%

Consecutive Years of Dividend Growth

5-Year Dividend Growth Rate

Financial Health & Profitability

Earnings Per Share

$4.30

Next Year EPS Growth Estimate

$11.15

Next Year Revenue Growth Estimate

$882.57B

Return on Equity (ROE)

21.06%

FREE CASH FLOW

Operating Margin

31.11%

Debt-to-Equity

0.45

Piotroski F-Score

5

Altman Z-Score

12.72

Return on Invested Capital (ROIC)

17.31%

Current Ratio

1.47

Quick Ratio

1.32

Net Debt to EBITDA

0.90

Interest Coverage

14.45

Gross Profit margin

88.85%

FCF PER SHARE

$5.26

REVENUE PER SHARE

$20.32

Gainseekers Quantitative Analysis

Summary

Cadence Design Systems is trading at a premium that seems disconnected from its intrinsic value. The market has priced it significantly above its DCF value and Graham Number, suggesting a potential overvaluation. With a Forward P/E of 32.37 and an Earnings Yield of just 1.19%, the stock appears expensive relative to its earnings potential. However, the Altman Z-score of 12.72 indicates strong financial health, reducing bankruptcy risk. This juxtaposition of high valuation and financial stability creates a complex narrative for investors.

AI Exposure / Tech Reliance

Operating in the Software - Application industry, Cadence is well-positioned to leverage AI advancements. Its focus on design automation and simulation tools aligns with the increasing demand for AI-driven solutions. This strategic positioning could enhance its resilience in the rapidly evolving tech landscape.

The Bull Case

For GARP investors, Cadence offers compelling reasons to buy. The company boasts a robust ROIC of 17.31%, highlighting efficient capital use. Despite a modest FCF Yield of 1.44%, its strong operating margin of 31.11% and a Piotroski F-Score of 5 suggest solid operational execution. These metrics indicate pricing power and a well-managed business, appealing to those seeking growth at a reasonable price.

The Bear Case

The stock's valuation metrics raise red flags for cautious investors. With a Price/Sales ratio of 18.00 and a Price/Book of 14.96, the stock is priced for perfection, leaving little room for error. Its proximity to the 52-week high further indicates technical overextension. The low FCF Yield and high EV to FCF ratio of 70.79 suggest that cash flow generation is not keeping pace with its market valuation, posing a risk if growth expectations falter.

Market Sentiment & Smart Money

Short Interest %

Analyst Consensus

Buy

Average Analyst Price Target

$370.83

Institutional Ownership %

1-Year Beta

1.13

Insider Buying % (6 Mo)

Distance to 52-Week High

3.36%

Distance to 52-Week Low

27.86%

EARNINGS SURPRISE %

2.62%

50-DAY SMA

$305.20

200-DAY SMA

$322.76

⚠️ Financial Disclaimer:
This content is for informational purposes only and is not financial advice. Information may be delayed or inaccurate. We may earn a commission from partner links.