Cadence Design Systems (CDNS)
NASDAQ:CDNS
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Cadence Design
(NASDAQ:CDNS)
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Rating:80Outperform
Price Target:
$383.00
▲(23.14% Upside)
Action:ReiteratedDate:04/28/26
CDNS scores well on strong financial performance and a very positive earnings outlook (raised guidance, record backlog, broad-based growth, and cash return plans). Technicals also support the score with a clear uptrend, while the main constraint is valuation risk from a very high P/E and modest balance-sheet flexibility after increased leverage.
Positive Factors
Strong multi‑year revenue growth
Sustained revenue expansion over multiple years demonstrates durable demand for Cadence's EDA and IP offerings, reflecting deep wallet penetration across digital, analog, verification and SDA. This scale supports reinvestment, product development and long-term client retention dynamics.
Negative Factors
Elevated leverage after recent M&A
Significantly higher debt following the Hexagon transaction reduces financial flexibility and increases interest and refinancing risk. This constrains optionality for further capital allocation and requires several quarters of strong cash generation or asset sales to meaningfully deleverage.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong multi‑year revenue growth
Sustained revenue expansion over multiple years demonstrates durable demand for Cadence's EDA and IP offerings, reflecting deep wallet penetration across digital, analog, verification and SDA. This scale supports reinvestment, product development and long-term client retention dynamics.
Read all positive factors
Cadence Design (CDNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$92.92B
Dividend YieldN/A
Average Volume (3M)2.09M
Price to Earnings (P/E)56.3
Beta (1Y)1.35
Revenue Growth14.12%
EPS Growth5.05%
CountryUS
Employees12,837
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.96
Shares Outstanding276,092,070
10 Day Avg. Volume2,175,274
30 Day Avg. Volume2,089,310
Financial Highlights & Ratios
PEG Ratio14.88
Price to Book (P/B)15.49
Price to Sales (P/S)16.01
P/FCF Ratio53.45
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue17.40
Enterprise Value/Gross Profit20.15
Enterprise Value/Ebitda49.23
Forecast
1Y Price Target
$374.77Price Target Upside20.49% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)7.89
Revenue Forecast (FY)$6.16B
Cadence Design Business Overview & Revenue Model
Company Description
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 ver...
How the Company Makes Money
Cadence primarily makes money by licensing its EDA software and selling hardware systems and services that help customers design, verify, and bring semiconductor chips and electronic systems to production.
1) EDA software licensing (primary reven...
Cadence Design Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Cadence Design is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Cadence Design is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyCadence Design Earnings Call Summary
Earnings Call Date:Apr 27, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 27, 2026
Earnings Call Sentiment Positive
The call reflects strong, broad-based operational and financial momentum: double-digit growth across major businesses (IP, EDA, SDA), record backlog, best-ever hardware quarter, major product launches in agentic AI and strategic partnerships. The principal near-term negatives are integration-related dilution and prudence in guidance tied to the Hexagon acquisition, plus leverage and regional lumpiness. These lowlights are manageable in context and management expects acquisition accretion in 2027.Positive Updates
Strong Top-Line Growth
Q1 total revenue of $1.474 billion, up 19% year-over-year; company raised 2026 revenue growth outlook to ~17% and expects to achieve Rule of 60 for the first time.
Negative Updates
Short‑Term Dilution from Hexagon Acquisition
Acquired Hexagon D&E expected to contribute ~$160 million revenue in 2026 but be dilutive in 2026 (~$0.28 EPS dilution cited) due to purchase financing (70% cash) and integration costs; management expects accretion in 2027.
Read all updates
Q1-2026 Updates
Positive
Negative
Strong Top-Line Growth
Q1 total revenue of $1.474 billion, up 19% year-over-year; company raised 2026 revenue growth outlook to ~17% and expects to achieve Rule of 60 for the first time.
Read all positive updates
Company Guidance
Cadence raised its 2026 revenue outlook to $6.125–$6.225 billion (≈17% YoY) and said it expects to achieve the Rule of 60; full‑year guidance includes GAAP operating margin 27.5%–28.5%, non‑GAAP operating margin 43.5%–44.5%, GAAP EPS $4.39–$4.49, non‑GAAP EPS $7.85–$7.95, and operating cash flow $1.875–$1.975 billion while planning to use approximately 50% of free cash flow for share repurchases. For Q2 the company guided revenue $1.555–$1.595 billion, GAAP operating margin 28.5%–29.5%, non‑GAAP operating margin 44.5%–45.5%, GAAP EPS $1.07–$1.13 and non‑GAAP EPS $2.02–$2.08; the outlook assumes existing export controls remain substantially similar and includes about $160 million of 2026 revenue from the Hexagon D&E acquisition (management cited roughly $0.28 of near‑term EPS dilution and a 5%–10% margin drag on that revenue, with accretion expected in 2027).Cadence Design Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
72
Positive
Cash Flow
84
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.30B | 4.64B | 4.09B | 3.56B | 2.99B |
| Gross Profit | 4.57B | 3.99B | 3.65B | 3.19B | 2.68B |
| EBITDA | 1.87B | 1.67B | 1.46B | 1.20B | 916.12M |
| Net Income | 1.11B | 1.06B | 1.04B | 848.95M | 695.96M |
Balance Sheet | |||||
| Total Assets | 10.15B | 8.97B | 5.67B | 5.14B | 4.39B |
| Cash, Cash Equivalents and Short-Term Investments | 3.00B | 2.78B | 1.14B | 886.82M | 1.09B |
| Total Debt | 2.48B | 2.59B | 764.41M | 887.41M | 454.71M |
| Total Liabilities | 4.68B | 4.30B | 2.27B | 2.39B | 1.65B |
| Stockholders Equity | 5.47B | 4.67B | 3.40B | 2.75B | 2.74B |
Cash Flow | |||||
| Free Cash Flow | 1.59B | 1.12B | 1.25B | 1.12B | 1.03B |
| Operating Cash Flow | 1.73B | 1.26B | 1.35B | 1.24B | 1.10B |
| Investing Cash Flow | -460.52M | -837.12M | -412.25M | -738.63M | -292.95M |
| Financing Cash Flow | -948.98M | 1.24B | -803.57M | -657.05M | -643.79M |
Cadence Design Technical Analysis
Positive
311.03
Price Trends
290.32
Positive
302.87
Positive
321.23
Negative
Market Momentum
2.85
Negative
62.78
Neutral
89.22
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDNS, the sentiment is Positive. The current price of 311.03 is above the 20-day moving average (MA) of 284.99, above the 50-day MA of 290.32, and below the 200-day MA of 321.23, indicating a neutral trend. The MACD of 2.85 indicates Negative momentum. The RSI at 62.78 is Neutral, neither overbought nor oversold. The STOCH value of 89.22 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CDNS.
Cadence Design Risk Analysis
Cadence Design disclosed 43 risk factors in its most recent earnings report. Cadence Design reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cadence Design Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $92.92B | 56.31 | 19.19% | ― | 14.12% | 5.05% | |
72 Outperform | $14.33B | 61.99 | 8.73% | ― | 9.10% | 18.67% | |
67 Neutral | $49.59B | 47.92 | 39.89% | ― | 17.80% | 2.09% | |
66 Neutral | $11.87B | 458.50 | 2.30% | ― | 19.16% | 881.78% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $49.87B | -48.84 | -60.27% | ― | 29.16% | -2.26% | |
49 Neutral | $58.58B | -11.08 | -8.35% | 0.08% | 2.97% | -146.35% |
* Technology Sector Average
CDNS
Cadence Design
325.31
27.57
9.26%
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Cadence Design Corporate Events
Business Operations and StrategyM&A TransactionsPrivate Placements and Financing
Cadence Design Completes Hexagon Smart Solutions Acquisition
Positive
Feb 23, 2026
Cadence Design Systems, Inc. completed the acquisition of the design and engineering business of Hexagon Smart Solutions AB, a Swedish private limited liability company, on February 23, 2026, under an Equity Purchase Agreement entered into on Sept...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.