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Fundamental analysis: Cadence Design Systems, Inc. (CDNS)

Awarener score: 6.6

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Average), the business stability (Superb) and growth (Good), and the company's inclination to return cash to the stockholders (Good).

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 8.5

  • Business has been growing at a good pace. It's been almost average when measured against peer companies.
  • Cadence Design Systems, Inc. business trend is extremely stable, which is best. It looks better than most rivals.

Margins score: 9.0

  • CDNS profit margins -on goods and services sold- are usually huge. They stand top-notch against rival companies.
  • Business profit on sales tends to be huge. It's top tier when measured against competitors.
  • Profits on sales made -available to repay debt and purchase properties- are usually very good. They remain excellent in relation to peers.
  • Earnings -before income taxes and interests on loans taken- tend to be very good in relation to total revenues. They're still top-notch against similar companies.
  • Profits -before income taxes- are usually excellent considering total sales, and remain top tier when measured against rivals.
  • Total net profit tends to be excellent when confronted to sales. Company stands top tier when measured against comparable firms.

Growth score: 6.9

  • Cadence Design Systems, Inc. profit -on goods and services sold- has been growing at a normal pace. It's been close to average when compared to competitors.
  • In recent years, earnings -on operations- have been growing at a good step, which has been somewhat better than comparable firms.
  • Profits -available to repay debt and purchase properties- have been growing at a normal pace, which compares almost average when measured against peer enterprises.
  • Earnings -before income taxes and interests on loans taken- have been growing at a normal tempo. It turns to be close to average when compared to similar stocks.
  • In past years, profits -before income taxes- grew at a good speed. It was slightly better than rivals.
  • In the previous years, growth trend on total net profit has been very good, and more than average in relation to peer companies.
  • Earnings per share have grown at a very good rhythm in past years. It's been in good shape compared to industry peers.

Miscellaneous score: 6.0

  • CDNS managed to get a credit on income taxes in the past years, even though it earned money. It's been well ranked against peers.
  • Research and development expenses consume quite a bit of revenues. It's substantially worse when measured against competitors.
  • The company grows very little in relation to research and development efforts. It stands in a weak position compared to rival companies.

Profitability score: 10.0

  • Cadence Design Systems, Inc. usually gets huge returns on the resources it controls. It proves top tier when measured against peer firms.
  • The company normally gets huge proceeds -on the resources directly invested in the business-. They remain impressive in relation to similar companies.
  • Profitability -in relation to owned resources- is usually paramount. It ranks top tier when measured against competitors.
  • In the past, got huge returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's top tier when measured against comparable enterprises.

Usage of Funds score: 5.2

  • CDNS usually uses a portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments is rather normal. It stands top tier when measured against rival firms.
  • The company is usually replacing some proportion of the property, plant, and equipment that gets old, saving part of the funds for something else, which is below average when measured against industry peers.
  • In the past twelve months the stock paid no dividends. It came bottom tier against competitors.
  • The company pays no dividend, so measuring its growth is meaningless. The company has behaved in an conservative way compared to similar firms.
  • As no dividends are paid, it is useless trying to estimate their sustainability in time. Sustainability looks not applicable in regard to comparable companies.
  • The company usually neither enlarges nor reduces the pool of investors, resulting in approximately the same mouths feeding on the pie of profits. It remains excellent in relation to peer enterprises.
  • Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands a slight improvement compared to rivals.
  • The company uses a significant portion of genuine fund generation to reward investors, which can probably be sustained for as long as business doesn't turn sour. It still looks almost average when measured against competitors.

Balance Sheet score: 5.3

  • Cadence Design Systems, Inc. intangible assets (like brands and goodwill) represent some portion of resources controlled, according to accounting books. There could be some difficulties in liquidating them if the company ever gets in financial distress. It happens to be almost average when measured against peer companies.
  • The company has more short-term resources than short-term obligations. Liquidity concerns shouldn't be an issue. It turns to be close to average when compared to similar firms.
  • A very minor portion of resources controlled were provided for with financial debt. Financial strength is solid. Company could increase debt if it wished so, to reinvest in business, to buy a smaller company or to reward stockholders. It remains somewhat better than rival firms.
  • Controlled resources might be turned into cash and equivalents neither fast nor too slow. Liquidity and risk might be run-of-the-mill. It looks almost average when measured against rivals.
  • For every dollar of short-term obligations, the company has enough dollars in cash and short-term receivables. It's close to average when compared to peer firms.
  • For every dollar of short-term obligations, the company has roughly another of cash and equivalents, which is slightly worse than similar enterprises.
  • Usually, sales are on a month and a half credit. It still ranks more than average in relation to peers.
  • Normally has approximately five months of sales worth in inventory. It comes up as in a very weak position compared to competitors.
  • On average, it takes higher than six months from the purchase to charging customers. It happens to be worse than most peers.
  • Pays suppliers mostly in cash. It ranks last-in-rank when measured against industry peers.
  • The company pays its suppliers six months or more before charging its customers, so there's abundant money invested in working capital. It's a disappointment compared to similar companies.
  • Net interest expenses consume a non-significant portion of usual business earnings, and are therefore extremely easily to bear. It stands somewhat better than rival firms.
  • Business earnings have usually been excellent when measured against loans taken. It could take less than two years to repay the obligations with current profitability. It ranks great when measured against comparable enterprises.
  • Revenues are very good in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. Low property, plant, and equipment requirements allows the company to keep more money to reward stockholders in the long run. It looks rather normal in relation to similar firms.
  • Resource exploitation is quite good when yearly sales are considered. This metric is normally tied to the industry where the firm belongs. It's still well ranked against peer companies.

Valuation score: 4.2

  • Cadence Design Systems, Inc. looks heavily expensive in relation to profits and financial position. It happens to be almost average when measured against competitors.
  • Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains in a very weak position compared to peers.
  • In the past twelve months, the company generated some free funds in relation to the stock price, which stands somewhat better than similar companies.
  • The company usually generates somewhat more than enough genuine funds to cover up for its business needs. Surplus cash may be used to repay loans, to eventually buy new businesses, or to reward investors. Considering the financial position and stock price, the current valuation might be reasonable. It's still encouraging in relation to industry firms.
  • In the past twelve months, the company has barely rewarded investors, considering both dividends and share on the pie of earnings. It came up excellent in relation to peer ventures.
  • The company has more cash than debt. It might be poised to increase stockholder payments, or to fund new business projects. It looks slightly worse than similar enterprises.
  • Considering the past twelve months, traditional Price-to-Earnings relation is huge, as profits were extremely low in relative terms. It ranks almost average when measured against peer companies.
  • Comparing the current stock price with the past twelve-months revenues gives a huge relationship. The stock price might rely more on expectations and resources controlled than on anything else. It looks a disappointment compared to rival firms.
  • The relation between the stock price and accounting book value is extremely high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains mediocre against peer firms.
  • In the past twelve months, the operating business lost a little money. It happens to be more than average in relation to industry peers.
  • In an alternate metric of bang for the buck, the company has usually shown a mediocre earnings power ability when measured against the current stock price and financial position. It's still in good shape compared to peer companies.

Total score: 6.9


CDNS logos

Company at a glance: Cadence Design Systems, Inc. (CDNS)

Sector, industry: Technology, Software—Application

Market Cap: 46.48 billions

Revenues TTM: 3.28 billions

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.

Awarener score: 6.6

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Average), the business stability (Superb) and growth (Good), and the company's inclination to return cash to the stockholders (Good).