Cadence Design (CDNS) AI Stock Analysis

• Market Cap: $94.52B
• Dividend Yield: N/A
• Average Volume (3M): 1.81M
• Price to Earnings (P/E): 93.5
• Beta (1Y): 1.44
• Revenue Growth: 22.29%
• EPS Growth: -4.94%
• Country: US
• Employees: 12,837
• Sector: Technology
• Sector Strength: 83
• Industry: Software - Application
• EPS (TTM): 1.65
• Shares Outstanding: 272,490,000
• 10 Day Avg. Volume: 1,488,596
• 30 Day Avg. Volume: 1,806,008
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.89
• Enterprise Value/Revenue: 16.46
• Enterprise Value/Gross Profit: 19.27
• Enterprise Value/Ebitda: 49.59
• 1Y Price Target: $370.69
• Price Target Upside: 6.65% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 16

• Rating: 71 Outperform
• Price Target: $410.00 ▲(17.96% 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 delivered strong revenue, margin, and EPS results despite temporary China EDA export control restrictions.

Growth Potential

The company raised its revenue guidance for CY25 by $50 million and EPS estimates, indicating strong future growth expectations.

Market Opportunities

Cadence Design Systems is well positioned for Electronic Design Automation share gains and maintains a Buy rating.

Negative Factors

Market Demand Uncertainty

The rating on CDNS is lowered due to being hard-pressed to forecast growth or profit materially beyond the current trajectory without demonstrable changes in semiconductor market demand.

Valuation Concerns

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.

Cadence Design Business Overview & Revenue Model

Company Description

Cadence Design Systems, Inc. (CDNS) is a leading American electronic design automation (EDA) software and engineering services company that provides solutions for designing complex electronic systems. The company primarily serves sectors such as semiconductor, systems-on-chip (SoCs), and electronic systems design, offering a range of products that include design tools, verification software, and intellectual property (IP) cores. Cadence's software solutions facilitate efficient design and verification processes across various applications, from consumer electronics to automotive systems.

How the Company Makes Money

Cadence generates revenue primarily through the sales of its software licenses, which include both perpetual and subscription-based models. Additionally, the company earns substantial income from maintenance and support services associated with these software products. Key revenue streams include licensing fees from its flagship tools such as the Cadence Allegro platform for PCB design and the Virtuoso platform for analog design. Furthermore, Cadence enhances its earnings through the sale of IP cores, which provide reusable design components for semiconductor companies. Strategic partnerships with major semiconductor manufacturers and collaborations in emerging technologies such as AI and machine learning also contribute to the company's revenue growth by expanding its customer base and enhancing product offerings.

Cadence Design Financial Statement Overview

Summary

Cadence Design demonstrates robust financial health, characterized by strong revenue growth and high profitability margins. The company maintains excellent cash flow generation capabilities, supported by efficient capital management and low debt levels. A slight decrease in net profit margins and return on equity requires monitoring but does not significantly detract from overall performance.

Income Statement

Cadence Design has demonstrated strong revenue growth with a consistent increase in revenue over the years, highlighted by a TTM (Trailing-Twelve-Months) revenue of $5.09 billion, reflecting a robust revenue growth rate of 9.64% from 2024 to TTM 2025. The gross profit margin remains strong at 85.39%, indicating efficient cost management relative to revenue. The net profit margin has slightly decreased to 19.88% in TTM 2025 from 22.74% in 2024, yet it remains healthy. EBIT and EBITDA margins are solid, reflecting operational efficiency. Overall, the income statement shows strong growth trajectories and profitability, though a slight decline in net margins warrants attention.

Balance Sheet

The balance sheet reflects a solid equity position with a debt-to-equity ratio of 0.38 in TTM 2025, suggesting low financial leverage and stability. The equity ratio has improved to 68.39%, indicating a strong equity base relative to total assets. Return on equity has decreased to 15.56% from 22.58% in 2024, potentially signaling reduced efficiency in generating profits from shareholders' equity. The company's liquidity remains robust with significant cash reserves. Overall, the balance sheet is strong, with a stable financial position, though the drop in ROE requires monitoring.

Cash Flow

Cadence Design's cash flow is very healthy, with strong operating cash flow exceeding net income, resulting in a high operating cash flow to net income ratio of 1.70. The free cash flow growth rate has been impressive, growing by 41.78% from 2024 to TTM 2025. The company maintains an excellent free cash flow to net income ratio of 1.57, indicating efficient cash generation from operations. Overall, the cash flow statement reflects strong cash generation capabilities and efficient capital management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.09B	4.64B	4.09B	3.56B	2.99B	2.68B
Gross Profit	4.35B	3.99B	3.65B	3.19B	2.68B	2.38B
EBITDA	1.69B	1.67B	1.46B	1.20B	916.12M	803.63M
Net Income	1.01B	1.06B	1.04B	848.95M	695.96M	590.64M
Balance Sheet
Total Assets	9.51B	8.97B	5.67B	5.14B	4.39B	3.95B
Cash, Cash Equivalents and Short-Term Investments	2.82B	2.78B	1.14B	886.82M	1.09B	928.43M
Total Debt	2.48B	2.59B	764.41M	887.41M	454.71M	460.71M
Total Liabilities	4.50B	4.30B	2.27B	2.39B	1.65B	1.46B
Stockholders Equity	5.01B	4.67B	3.40B	2.75B	2.74B	2.49B
Cash Flow
Free Cash Flow	1.59B	1.12B	1.25B	1.12B	1.03B	810.11M
Operating Cash Flow	1.72B	1.26B	1.35B	1.24B	1.10B	904.92M
Investing Cash Flow	-276.67M	-837.12M	-412.25M	-738.63M	-292.95M	-292.16M
Financing Cash Flow	282.80M	1.24B	-803.57M	-657.05M	-643.79M	-415.29M

Cadence Design Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 347.57
• 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 347.57 is below the 20-day moving average (MA) of 354.05, above the 50-day MA of 328.97, and above the 200-day MA of 298.68, indicating a neutral trend. The MACD of 5.07 indicates Positive momentum. The RSI at 55.06 is Neutral, neither overbought nor oversold. The STOCH value of 45.44 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	81 Outperform	$13.19B	30.84	25.76%	0.66%	10.21%	-10.56%
MANH	76 Outperform	$13.03B	59.09	85.16%	―	6.13%	9.17%
ADSK	75 Outperform	$61.88B	61.85	42.36%	―	12.89%	1.23%
PCTY	73 Outperform	$9.82B	45.13	20.04%	―	13.74%	10.99%
CDNS	71 Outperform	$94.52B	93.47	21.84%	―	22.29%	-4.94%
Sector *	48 Neutral	C$3.31B	1.44	-6.09%	8.93%	9.21%	-18.20%

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.