Cadence Design (CDNS) AI Stock Analysis

• Market Cap: $82.13B
• Dividend Yield: N/A
• Average Volume (3M): 1.92M
• Price to Earnings (P/E): 75.7
• Beta (1Y): 1.52
• Revenue Growth: 19.55%
• EPS Growth: 2.35%
• Country: US
• Employees: 12,837
• Sector: Technology
• Sector Strength: 82
• Industry: Software - Application
• EPS (TTM): 1.57
• Shares Outstanding: 273,042,000
• 10 Day Avg. Volume: 1,559,845
• 30 Day Avg. Volume: 1,923,859
• PEG Ratio: 2.21
• Price to Book (P/B): 15.87
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 38.98
• Enterprise Value/Market Cap: 0.53
• Enterprise Value/Revenue: 2.41
• Enterprise Value/Gross Profit: 10.38
• Enterprise Value/Ebitda: 6.72
• 1Y Price Target: $334.71
• Price Target Upside: 12.76% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 14

• Rating: 78 Outperform
• Price Target: $334.00 ▲(12.52%Upside)

Cadence Design's overall score reflects strong financial performance and positive earnings guidance. However, the high valuation and potential regulatory risks weigh down the score. While technicals indicate some support, the market's reaction to corporate events and valuation concerns suggests caution.

Positive Factors

Growth Potential

Cadence's hardware business and recurring revenue trends are highlighted as key strengths.

International Opportunities

Opportunities with Intel and custom silicon are seen as promising for Cadence.

Negative Factors

Currency Impact

CDNS pointed to weakening USD as a potential margin headwind.

Valuation Concerns

EDA stocks, including Cadence, trade at a more premium PEG ratio, creating a headwind when earnings upgrades are modest compared to other growth stocks.

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 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.

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 displays robust financial health with strong revenue growth, impressive profitability margins, and a solid balance sheet. The company's consistent free cash flow generation underscores its financial stability and capacity for reinvestment and shareholder value creation.

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
TTM	Dec 2024	Dec 2023	Dec 2022	Mar 2022	Mar 2021
Income Statement		Total Revenue
4.87B	4.64B	4.09B	3.56B	2.99B	2.68B
	Gross Profit
4.19B	3.99B	3.65B	3.19B	2.68B	2.38B
	EBIT
1.46B	1.35B	1.25B	1.07B	779.09M	645.55M
	EBITDA
1.75B	1.67B	1.46B	1.20B	916.12M	799.15M
	Net Income Common Stockholders
1.08B	1.06B	1.04B	848.95M	695.96M	590.64M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.78B	2.78B	1.14B	882.33M	1.09B	928.43M
	Total Assets
9.01B	8.97B	5.67B	5.14B	4.39B	3.95B
	Total Debt
2.48B	2.59B	806.03M	748.08M	347.59M	346.79M
	Net Debt
-300.51M	-58.95M	-202.12M	-134.25M	-741.35M	-581.64M
	Total Liabilities
4.24B	4.30B	2.27B	2.39B	1.65B	1.46B
	Stockholders Equity
4.78B	4.67B	3.40B	2.75B	2.74B	2.49B
Cash Flow		Free Cash Flow
1.38B	1.12B	1.25B	1.12B	1.03B	810.11M
	Operating Cash Flow
1.49B	1.26B	1.35B	1.24B	1.10B	904.92M
	Investing Cash Flow
-779.13M	-837.12M	-412.25M	-738.63M	-292.95M	-292.16M
	Financing Cash Flow
1.05B	1.24B	-803.57M	-657.05M	-643.79M	-415.29M

Cadence Design Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 296.84
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 296.84 is below the 20-day moving average (MA) of 301.27, above the 50-day MA of 293.75, and above the 200-day MA of 284.08, indicating a neutral trend. The MACD of 0.59 indicates Positive momentum. The RSI at 46.85 is Neutral, neither overbought nor oversold. The STOCH value of 27.79 is Neutral, 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
PAYC	80 Outperform	$13.98B	34.51	24.99%	0.64%	9.86%	-14.34%
ADSK	79 Outperform	$63.51B	63.25	42.36%	―	12.89%	1.23%
CDNS	78 Outperform	$82.13B	75.73	25.92%	―	19.55%	2.35%
MANH	75 Outperform	$11.63B	53.73	89.60%	―	9.18%	14.35%
ANSS	75 Outperform	$29.61B	49.92	10.23%	―	15.98%	35.52%
PCTY	71 Outperform	$9.77B	44.00	19.70%	―	14.63%	17.15%
Sector *	62 Neutral	$11.95B	9.93	-7.21%	4.85%	7.32%	-8.25%

Cadence Design Corporate Events

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.