Cadence Design Systems (CDNS)
Information Technology · $81.8B market cap · SEC CIK 0000813672
fundamentals score out of 100
Next reports on Oct 26, 2026, with analysts expecting $2.08 in earnings per share.
The case for CDNS
- Generated $1.6B of free cash flow in FY2025, 30% of revenue.
- 24% of revenue drops through to net profit.
- Revenue growing 14.7% year over year.
- Earnings per share up 36.0%.
- Has compounded revenue at 14.6% a year over five years.
- Return on equity of 23%.
The case against
- Very expensive at 59.3× earnings. Years of growth are already in the price.
- Down 21.0% over the past year.
- Priced at 14.0× sales, which leaves no room for a stumble.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Information Technology companies (momentum is judged against fixed thresholds only), and the five are blended by weight. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings, sales, assets and cash | 26 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 70 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 75 |
| Momentumhow the price has behaved lately | 21 |
| Stabilityhow violently it moves, what it owes and what it pays you | 82 |
- Each factor except momentum is half fixed thresholds, half rank among the 73 Information Technology companies.
Key numbers
| Price / earnings | 59.3× |
|---|---|
| Price / book | 15.09× |
| Price / sales | 14.0× |
| Revenue growth (YoY) | +14.7% |
| EPS growth (YoY) | +36.0% |
| Gross margin | 86% |
| Operating margin | 30% |
| Net margin | 24% |
| Return on equity | 23% |
| Debt / equity | 0.36× |
| Current ratio | 1.74 |
| Dividend yield | none |
| Beta | 1.10 |
| 52-week range | $262.75 – $416.69 |
| Position in that range | 26% of the way up |
| 3-month return | -23.9% |
| 1-year return | -21.0% |
Five years of financials, as filed
Pulled from Cadence Design Systems's XBRL filings on SEC EDGAR. Italic rows are derived from the rows above.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue | $5.3B | $4.6B | $4.1B | $3.6B | $3.0B |
| Operating income | $1.5B | $1.4B | $1.3B | $1.1B | $779M |
| Net income | $1.1B | $1.1B | $1.0B | $849M | $696M |
| Operating cash flow | $1.7B | $1.3B | $1.3B | $1.2B | $1.1B |
| Capital expenditure | $142M | $143M | $102M | $123M | $65.3M |
| Total assets | $10.2B | $9.0B | $5.7B | $5.1B | $4.4B |
| Shareholder equity | $5.5B | $4.7B | $3.4B | $2.7B | $2.7B |
| Cash | $3.0B | $2.6B | $1.0B | $882M | $1.1B |
| Free cash flow | $1.6B | $1.1B | $1.2B | $1.1B | $1.0B |
| Operating margin | 28.2% | 29.1% | 30.6% | 30.1% | 26.1% |
| Net margin | 20.9% | 22.7% | 25.5% | 23.8% | 23.3% |
| Diluted shares | 273M | 274M | 273M | 275M | 279M |
Share count is essentially flat over 4 years.
What Cadence Design Systems says it does
This Annual Report and the documents incorporated by reference in this Annual Report contain statements that are not historical in nature, are predictive, or that depend upon or refer to future events or conditions or contain other forward-looking statements. Statements including, but not limited to, statements regarding artificial intelligence ("AI"), other technological and market advancements and their impacts on our business; the extent, timing and mix of future revenues and customer demand; the deployment of our products and services; the impact of the macroeconomic and geopolitical environment, including but not limited to, expanded trade controls, tariffs, conflicts around the world, volatility in foreign currency exchange rates, inflation and changes in interest rates; the impact of government actions; future costs, expenses, tax rates and uses of cash; pending legal, administrative and tax proceedings; restructuring actions…
Risk factors CDNS lists in its 10-K
- Risks Related to Customers, Suppliers and Industry Competition
- Tax, Regulatory and Litigation Risks
- Risks Related to Our Securities and Indebtedness
- We have experienced varied operating results, and our operating results for any particular fiscal period are affected by the timing of revenue recognition, particularly for our hardware, IP and certain software products
- The growth of our business depends primarily on the semiconductor and electronics systems industries
- Uncertainty in the global economy and instability within international relations, including changes in governmental policies relating to technology, may negatively affect our business and reduce our bookings levels and revenue
- We are subject to governmental export and import controls that subject us to liability and impair our ability to compete in global markets as well as a variety of other laws and regulations
- We could suffer serious harm to our business because of the infringement or misappropriation of our IP rights by third parties
- We may not realize opportunities presented by AI and may incur reputational and financial harm and liability as a result of issues in the development and use of AI
- Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements
- Risks associated with our international operations could adversely impact our financial condition
- The effect of foreign exchange rate fluctuations may adversely impact our revenue, expenses, cash flows and financial condition
- We depend upon our management team and qualified employees, and our failure to attract, train, motivate and retain them may make us less competitive and therefore harm our results of operations
- The investment of our cash is subject to risks that may cause losses and affect the liquidity of these investments