Cadence Design Systems (CDNS)
NASDAQ:CDNS
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Cadence Design
(NASDAQ:CDNS)
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Rating:72Outperform
Price Target:
$329.00
▲(17.76% Upside)
Action:ReiteratedDate:02/24/26
CDNS scores well on business quality and forward outlook, driven by strong multi-year growth, solid profitability and free-cash-flow generation, and upbeat guidance with record backlog visibility. The score is held back by weak-to-mixed technicals (below key moving averages with negative MACD) and a demanding valuation (P/E ~73), which increases sensitivity to any growth or margin setbacks.
Positive Factors
Cash generation
Consistent, large operating cash flow (~$1.7B TTM) and FCF (~$1.6B TTM) support durable financial flexibility: funds R&D, product investment, buybacks and M&A without relying on external financing. Strong conversion (FCF ~0.91x net income) underpins multi-year capital allocation.
Negative Factors
Rising leverage
Material step-up in debt reduces financial flexibility versus earlier years. Higher leverage can constrain capital allocation during downturns, increase interest expense risk, and limit optionality for opportunistic M&A or accelerated R&D if cash generation weakens or hardware cycles soften.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Consistent, large operating cash flow (~$1.7B TTM) and FCF (~$1.6B TTM) support durable financial flexibility: funds R&D, product investment, buybacks and M&A without relying on external financing. Strong conversion (FCF ~0.91x net income) underpins multi-year capital allocation.
Read all positive factors
Cadence Design (CDNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$76.18B
Dividend YieldN/A
Average Volume (3M)2.45M
Price to Earnings (P/E)76.5
Beta (1Y)1.33
Revenue Growth19.72%
EPS Growth1.59%
CountryUS
Employees12,837
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.99
Shares Outstanding272,651,000
10 Day Avg. Volume2,382,771
30 Day Avg. Volume2,451,756
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/Revenue14.29
Enterprise Value/Gross Profit16.54
Enterprise Value/Ebitda40.42
Forecast
1Y Price Target
$369.08Price Target Upside32.10% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
EPS Forecast (FY)8.06
Revenue Forecast (FY)$6.02B
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 Design generates revenue primarily through the sale of software licenses, maintenance, and support services. The company's revenue model includes both perpetual licenses and subscription-based licensing, allowing customers to choose their ...
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:Feb 17, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 27, 2026
Earnings Call Sentiment Positive
The call delivered a strongly positive operating and financial message: durable double‑digit revenue growth (14%), robust non‑GAAP margins (~44.6%), record backlog ($7.8B), sizable cash generation and active share repurchases, plus clear product and AI momentum (ChipStack, Cerebrus, IP growth). Management did, however, emphasize prudence around hardware pipeline variability, China visibility, export‑control assumptions and excluded the Hexagon deal from guidance — and GAAP vs non‑GAAP differences merit investor attention. On balance, the positive operational results, backlog visibility and AI/product traction materially outweigh the cited risks and conservative assumptions.Positive Updates
Strong Revenue and Earnings Growth
Fiscal 2025 revenue grew 14% to $5.297 billion; fourth quarter revenue was $1.440 billion. Management reported ~20% EPS growth for the year. Non‑GAAP EPS was $7.14 for FY2025 (GAAP EPS $4.06).
Negative Updates
Guidance Assumptions and Acquisition Exclusion
2026 guidance assumes existing export control regulations remain substantially similar and does NOT include the pending Hexagon Design & Engineering acquisition — creating potential upside/uncertainty depending on regulatory or transaction timing. Management indicated Hexagon annualized revenue in the ~$200M range but did not include it in the guide.
Read all updates
Q4-2025 Updates
Positive
Negative
Strong Revenue and Earnings Growth
Fiscal 2025 revenue grew 14% to $5.297 billion; fourth quarter revenue was $1.440 billion. Management reported ~20% EPS growth for the year. Non‑GAAP EPS was $7.14 for FY2025 (GAAP EPS $4.06).
Read all positive updates
Company Guidance
Cadence’s 2026 outlook calls for revenue of $5.9–$6.0B, GAAP operating margin 31.75%–32.75% and non‑GAAP operating margin 44.75%–45.75%, GAAP EPS $4.95–$5.05 and non‑GAAP EPS $8.05–$8.15, and approximately $2.0B of operating cash flow while planning to deploy ~50% of free cash flow to share repurchases; the company noted the guide excludes the pending Hexagon D&E acquisition and assumes export control regulations remain substantially similar. For Q1 2026 Cadence guided revenue $1.420–$1.460B, GAAP operating margin 30%–31% and non‑GAAP 44%–45%, GAAP EPS $1.16–$1.22 and non‑GAAP EPS $1.89–$1.95. Management started 2026 with a record backlog of $7.8B (about 67% of 2026 revenue expected from beginning backlog), and disclosed year‑end cash of $3.01B, principal debt $2.5B, DSOs of 64 days, 2025 operating cash flow of $1.729B (Q4 operating cash flow $553M) and $925M of share repurchases in 2025.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
Negative
279.39
Price Trends
292.10
Negative
304.86
Negative
321.67
Negative
Market Momentum
-5.09
Positive
43.62
Neutral
39.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDNS, the sentiment is Negative. The current price of 279.39 is below the 20-day moving average (MA) of 285.40, below the 50-day MA of 292.10, and below the 200-day MA of 321.67, indicating a bearish trend. The MACD of -5.09 indicates Positive momentum. The RSI at 43.62 is Neutral, neither overbought nor oversold. The STOCH value of 39.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | $76.18B | 76.48 | 21.68% | ― | 19.72% | 1.59% | |
71 Outperform | $14.49B | 61.99 | 8.73% | ― | 10.62% | 31.43% | |
67 Neutral | $50.16B | 47.92 | 39.89% | ― | 15.62% | 2.59% | |
66 Neutral | $12.93B | 458.50 | 2.30% | ― | 19.21% | 75.32% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $51.64B | -48.84 | -60.27% | ― | 28.48% | -19.12% | |
46 Neutral | $44.13B | -11.08 | -8.35% | 0.08% | 1.65% | ― |
* Technology Sector Average
CDNS
Cadence Design
279.39
47.75
20.61%
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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.