CDNSCadence Design Systems shows strong fundamental performance, particularly in profitability and growth, aligning well with secular themes in semiconductor design. While technical indicators suggest current price levels may be somewhat extended, the overall outlook remains positive.
Cadence is a key enabler of advanced semiconductor design, benefiting from long-term trends in AI, high-performance computing, automotive, and 5G. Its software and IP are critical for the development of next-generation chips.
Cadence exhibits strong financial health, consistent revenue and earnings growth, and a solid balance sheet with ample cash. Its profitability metrics are impressive, though valuation is on the higher side.
The stock has shown strong upward momentum, trading above key moving averages. However, several short-term indicators suggest it might be approaching overbought levels, indicating potential for a pause or minor retracement.
| Factor | Score |
|---|---|
| Semiconductor Industry Growth | 90 |
| AI and Machine Learning Enablement | 95 |
| Digital Transformation | 85 |
| Automotive and IoT Expansion | 80 |
| Supply Chain Resilience & Geopolitics | 70 |
| Factor | Score |
|---|---|
| Valuation | 50 |
| Profitability | 85 |
| Growth | 88 |
| Balance Sheet Health | 75 |
| Cash Flow | 85 |
| Earnings Consistency | 90 |
| Factor | Score |
|---|---|
| Trend Analysis | 80 |
| Momentum | 60 |
| Volume Confirmation | 70 |
| Support & Resistance | 65 |
| Short-term Oscillators | 50 |
Consistent EPS Beat
The company has a strong track record of exceeding earnings per share (EPS) estimates, with 11 out of the last 12 quarters showing positive surprises. The latest quarter's EPS was $1.57, beating the estimate of $1.49 by 5.35%.
Reasonable P/E Ratio
The trailing Price-to-Earnings (P/E) ratio of 82.19, while seemingly high, is supported by strong historical growth and a forward P/E that suggests future earnings growth might justify the current valuation, especially considering the industry average.
High Forward P/E
Quarterly P/E ratios, particularly for Q1 2025 (253.8) and Q4 2024 (241.1), indicate a very high valuation relative to current earnings, suggesting significant growth expectations are already priced in.
Slowing Revenue Growth
While EPS has been strong, the revenue growth has shown a decelerating trend from Q4 2023 ($4.09B) to Q4 2024 ($4.64B), with a notable dip in Q4 2024 revenue compared to Q3 2024. The Q4 2024 revenue of $1.35B was lower than Q1 2025's projected $1.24B, indicating potential near-term softness.
July 2025
29
Next Earnings Date
H: $1.60
A: $1.56
L: $1.44
H: 1.27B
A: 1.25B
L: 1.20B
Cadence Design Systems, Inc. provides software, hardware, and other services worldwide. The company offers functional verification services, such as Jasper, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. It also provides digital IC design and sign off products, including Genus synthesis and Joules RTL power solutions, as well as Modus DFT software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and performing sign-off checks for manufacturing; and Innovus implementation system, a digital IC design and signoff solution. In addition, the company offers custom IC design and simulation, such as Virtuoso Studio, a solution platform for custom, analog, mixed-signal, photonics, and RF semiconductors; and system design and analysis products, a Multiphysics platform that helps in design and simulate electronics and entire systems in electromagnetic, thermal, structure, computational fluid dynamics, molecular, PCB and packaging, mechanical, and structural analysis. Further, it provides semiconductor IP product for design architectures; Functional Verification; digital ic design and signoff; EDA product that addresses the design and verification for semiconductor chips and manufacturing process technologies; and verification IP with 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. It serves consumer, hyperscale computing, 5G communications, mobile, automotive, aerospace and defense, industrial, and life science industries. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.
329.77 USD
The 39 analysts offering 1 year price forecasts for CDNS have a max estimate of 380.00 and a min estimate of 200.00.