Cadence Design (CDNS) AI Stock Analysis

• Market Cap: $100.00B
• Dividend Yield: N/A
• Average Volume (3M): 1.83M
• Price to Earnings (P/E): 100.4
• Beta (1Y): 1.51
• Revenue Growth: 22.29%
• EPS Growth: -4.94%
• Country: US
• Employees: 12,837
• Sector: Technology
• Sector Strength: 98
• Industry: Software - Application
• EPS (TTM): 1.65
• Shares Outstanding: 273,042,000
• 10 Day Avg. Volume: 2,205,600
• 30 Day Avg. Volume: 1,830,340
• PEG Ratio: -15.10
• Price to Book (P/B): 15.35
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 63.32
• Enterprise Value/Market Cap: 1.00
• Enterprise Value/Revenue: 14.44
• Enterprise Value/Gross Profit: 68.80
• Enterprise Value/Ebitda: 60.94
• 1Y Price Target: $368.81
• Price Target Upside: 1.16% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

• Rating: 71 Outperform
• Price Target: $410.00 ▲(12.46%Upside)

Cadence Design's overall stock score reflects strong financial performance and a positive outlook from recent earnings, despite technical overbought conditions and high valuation metrics. Corporate events, while resolved, present ongoing compliance and operational challenges. The company's strong position in its industry and growth potential, particularly in AI-driven segments, provide a solid foundation for future growth.

Positive Factors

Financial Performance

Cadence raised its 2025 revenue and EPS guidance, showing confidence in future financial performance.

Growth Potential

Cadence's investment into 3D solvers opens up a larger addressable market, boosting growth potential.

Market Demand

Advanced chip design activity is driving strong demand for core EDA software, IP, and hardware platforms.

Negative Factors

China Restrictions

Bookings may be weak due to uncertainty about China restrictions, which could affect the book-to-bill ratio.

Stock Volatility

CDNS’s premium valuation can increase stock volatility and become a headwind when the pace of upward earnings revisions is slower than other growth companies.

Valuation Concerns

While fundamentals continue to showcase robust growth both inside & outside core EDA, the rating is lowered to Neutral as valuation has moved beyond an attractive level.

Cadence Design Business Overview & Revenue Model

Company Description

Cadence Design Systems, Inc. (CDNS) is a leading provider of electronic design automation (EDA) software, hardware, and semiconductor intellectual property (IP). Headquartered in San Jose, California, the company primarily serves the high-tech electronics industry, including sectors such as consumer electronics, automotive, aerospace, and telecommunications. Cadence's core products include design tools for chip and system-level design, verification, and implementation, which enable engineers to develop advanced electronic systems and semiconductor devices efficiently.

How the Company Makes Money

Cadence Design Systems generates revenue primarily through the sale of its electronic design automation (EDA) software licenses and related services. The company offers both perpetual and time-based licenses, allowing clients to choose purchasing models that best suit their needs. Cadence also earns money from its semiconductor IP offerings, which are pre-designed functional blocks that customers can incorporate into their integrated circuits, thus speeding up design times and reducing costs. Additionally, the company provides maintenance and support services, which generate recurring revenue. Key partnerships with major technology firms and ongoing investments in research and development further bolster Cadence's revenue streams by ensuring its products remain at the forefront of technological advancement and meet the evolving needs of its diverse customer base.

Cadence Design Financial Statement Overview

Summary

Cadence Design exhibits strong financial health with robust revenue growth, solid profitability margins, and a stable balance sheet. The company's efficient cost management and strong equity position further bolster its financial stability, mitigating risks despite moderate leverage.

Income Statement

Cadence Design exhibits strong profitability with a consistent increase in total revenue and substantial growth in net income over the years. The company maintains an excellent gross profit margin, indicating effective cost management and pricing strategies. The net profit margin and EBIT margin are solid, showcasing operational efficiency. Revenue growth remains robust, with a positive trajectory over multiple periods, reinforcing the company's competitive position in the market.

Balance Sheet

The balance sheet reflects a solid financial structure with a strong equity position, evidenced by a high equity ratio. The company's debt-to-equity ratio suggests a balanced approach to leveraging, minimizing financial risks. Return on equity is impressive, indicating effective use of shareholders' capital to generate income. The stability in stockholders' equity growth supports long-term business sustainability and financial health.

Cash Flow

Cadence Design showcases a strong cash flow position with consistent growth in free cash flow, reflecting efficient capital management and operational success. The operating cash flow to net income ratio is healthy, suggesting high-quality earnings. The free cash flow to net income ratio further supports strong liquidity and the potential for reinvestment or shareholder returns. The company demonstrates effective cash flow management, contributing to overall financial stability.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.64B	4.09B	3.56B	2.99B	2.68B
Gross Profit	3.99B	3.65B	3.19B	2.68B	2.38B
EBITDA	1.67B	1.46B	1.20B	916.12M	803.63M
Net Income	1.06B	1.04B	848.95M	695.96M	590.64M
Balance Sheet
Total Assets	8.97B	5.67B	5.14B	4.39B	3.95B
Cash, Cash Equivalents and Short-Term Investments	2.78B	1.14B	882.33M	1.09B	928.43M
Total Debt	2.63B	806.03M	748.08M	347.59M	346.79M
Total Liabilities	4.30B	2.27B	2.39B	1.65B	1.46B
Stockholders Equity	4.67B	3.40B	2.75B	2.74B	2.49B
Cash Flow
Free Cash Flow	1.12B	1.25B	1.12B	1.03B	810.11M
Operating Cash Flow	1.26B	1.35B	1.24B	1.10B	904.92M
Investing Cash Flow	-837.12M	-412.25M	-738.63M	-292.95M	-292.16M
Financing Cash Flow	1.24B	-803.57M	-657.05M	-643.79M	-415.29M

Cadence Design Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 364.57
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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 364.57 is above the 20-day moving average (MA) of 328.90, above the 50-day MA of 312.89, and above the 200-day MA of 291.79, indicating a bullish trend. The MACD of 13.01 indicates Negative momentum. The RSI at 75.48 is Negative, neither overbought nor oversold. The STOCH value of 89.66 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CDNS.

Cadence Design Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ADSK	79 Outperform	$64.85B	64.95	42.36%	―	12.89%	1.23%
MANH	75 Outperform	$13.63B	63.52	85.16%	―	6.13%	9.17%
PCTY	75 Outperform	$10.51B	46.48	19.70%	―	14.63%	17.15%
PAYC	75 Outperform	$13.73B	33.90	24.99%	0.65%	9.86%	-14.34%
CDNS	71 Outperform	$100.00B	100.39	21.84%	―	22.29%	-4.94%
Sector *	62 Neutral	$35.05B	6.90	-11.57%	2.06%	6.28%	-15.90%

Cadence Design Corporate Events

Cadence Design Settles Export Violation Charges

Cadence Design Systems has reached settlements with the Bureau of Industry and Security and the Department of Justice regarding export law violations between 2015 and 2021. These violations involved unauthorized sales and technology transfers to China, valued at $45.3 million. As part of the resolution, Cadence will pay $140.6 million in penalties and has agreed to enhance its export compliance programs, including a plea agreement with a three-year probationary term and additional compliance obligations.

The most recent analyst rating on (CDNS) stock is a Sell with a $225.00 price target. To see the full list of analyst forecasts on Cadence Design stock, see the CDNS Stock Forecast page.

Cadence Design Restores EDA Access After License Rescind

On May 23, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security informed Cadence Design Systems, Inc. that a license was required for the export, re-export, or in-country transfer of certain electronic design automation software and technology to parties in China or Chinese military end users. However, on July 2, 2025, the license requirements were rescinded, allowing Cadence to restore access to its EDA software and technology for affected customers, aligning with updated U.S. export regulations.

The most recent analyst rating on (CDNS) stock is a Sell with a $225.00 price target. To see the full list of analyst forecasts on Cadence Design stock, see the CDNS Stock Forecast page.

Cadence Design Faces New Export License Requirement

On May 23, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security informed Cadence Design Systems that a license is now required for the export, re-export, or in-country transfer of certain electronic design automation software and technology to China or Chinese military end users. This decision, due to concerns about military use, may impact Cadence’s business operations and financial results, prompting the company to seek further clarification from the authorities.

The most recent analyst rating on (CDNS) stock is a Sell with a $225.00 price target. To see the full list of analyst forecasts on Cadence Design stock, see the CDNS Stock Forecast page.

Cadence Design Expands Share Repurchase Program

At the 2025 Annual Meeting of Stockholders held on May 8, Cadence Design Systems, Inc. announced the election of ten directors to serve until the 2026 Annual Meeting, with all nominees successfully elected. Additionally, stockholders approved executive officer compensation and the selection of PricewaterhouseCoopers LLP as the independent auditor for the fiscal year ending December 31, 2025, while a proposal on political spending was not approved. Furthermore, the board authorized an additional $1.5 billion for the company’s share repurchase program, allowing for flexible repurchase strategies based on market conditions and other factors.

The most recent analyst rating on (CDNS) stock is a Sell with a $225.00 price target. To see the full list of analyst forecasts on Cadence Design stock, see the CDNS Stock Forecast page.