Cadence Design Systems, Inc. (CDNS) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

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Comparison

Company

Score

Quality

Valuation

Financial

Technical

Intuit, Inc.

ServiceNow, Inc.

Adobe, Inc.

Salesforce, Inc.

Cadence Design Systems, Inc.

Oracle Corp.

Palo Alto Networks, Inc.

Shopify, Inc.

Synopsys, Inc.

VMware, Inc.

Activision Blizzard, Inc.

Why is Cadence Design Systems, Inc. ?

Strong Long Term Fundamental Strength with an average Return on Equity (ROE) of 26.93%

Healthy long term growth as Operating profit has grown by an annual rate 24.27%
Company has a low Debt to Equity ratio (avg) at times

The company has declared Negative results for the last 4 consecutive quarters

INTEREST(HY) At USD 58.07 MM has Grown at 168.86%
ROCE(HY) Lowest at 21.84%
DEBTORS TURNOVER RATIO(HY) Lowest at 7.57 times

With ROE of 23.03%, it has a fair valuation with a 20.10 Price to Book Value

The stock is trading at a premium compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of -2.79%, its profits have risen by 4.5% ; the PEG ratio of the company is 23

High Institutional Holdings at 92.89%

These investors have better capability and resources to analyse fundamentals of companies than most retail investors.
Their stake has increased by 1.18% over the previous quarter.

Underperformed the market in the last 1 year

Even though the market (S&P 500) has generated returns of 12.33% in the last 1 year, the stock has hugely underperformed and has generate negative returns of -2.79% returns

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to Cadence Design Systems, Inc. should be less than 10%
Overall Portfolio exposure to Software Products should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Software Products)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is Cadence Design Systems, Inc. for you?

Medium Risk, Low Return

Absolute

Risk Adjusted

Volatility

Cadence Design Systems, Inc.

7.68%

0.06

39.17%

S&P 500

13.22%

0.61

20.17%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

15.88%

EBIT Growth (5y)

24.27%

EBIT to Interest (avg)

35.13

Debt to EBITDA (avg)

Net Debt to Equity (avg)

-0.06

Sales to Capital Employed (avg)

0.84

Tax Ratio

24.98%

Dividend Payout Ratio

Pledged Shares

Institutional Holding

92.89%

ROCE (avg)

37.84%

ROE (avg)

26.93%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

20.10

EV to EBIT

64.16

EV to EBITDA

56.23

EV to Capital Employed

21.38

EV to Sales

19.63

PEG Ratio

22.99

Dividend Yield

ROCE (Latest)

33.32%

ROE (Latest)

23.03%

Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Mildly Bearish

Bullish

RSI

No Signal

Bollinger Bands

Mildly Bearish

Mildly Bullish

Moving Averages

Mildly Bullish (Daily)

KST

Mildly Bearish

Bullish

Dow Theory

No Trend

Mildly Bearish

OBV

No Trend

Mildly Bearish

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

5What is working for the Company

OPERATING CASH FLOW(Y)

Highest at USD 1,715.98 MM

RAW MATERIAL COST(Y)

Fallen by 1.64% (YoY

CASH AND EQV(HY)

Highest at USD 5,600.44 MM

INVENTORY TURNOVER RATIO(HY)

Highest at 3.88 times

-14What is not working for the Company

INTEREST(HY)

At USD 58.07 MM has Grown at 168.86%

ROCE(HY)

Lowest at 21.84%

DEBTORS TURNOVER RATIO(HY)

Lowest at 7.57 times

NET PROFIT(Q)

Lowest at USD 231.24 MM

EPS(Q)

Lowest at USD 0.59

Here's what is working for Cadence Design Systems, Inc.

Operating Cash Flow

Highest at USD 1,715.98 MM

in the last three years

MOJO Watch

The company has generated higher cash revenues from business operations

Operating Cash Flows (USD MM)

Cash and Eqv

Highest at USD 5,600.44 MM

in the last six Semi-Annual periods

MOJO Watch

Short Term liquidity is improving

Cash and Cash Equivalents

Inventory Turnover Ratio

Highest at 3.88 times

in the last five Semi-Annual periods

MOJO Watch

Company has been able to sell its inventory faster

Inventory Turnover Ratio

Raw Material Cost

Fallen by 1.64% (YoY)

MOJO Watch

The company's ability to pass on the cost of raw materials to customers has improved; this may lead to a rise in profit margin

Raw Material Cost as a percentage of Sales

Here's what is not working for Cadence Design Systems, Inc.

Interest

At USD 58.07 MM has Grown at 168.86%

over previous Semi-Annual period

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (USD MM)

Debtors Turnover Ratio

Lowest at 7.57 times and Fallen

In each half year in the last five Semi-Annual periods

MOJO Watch

Company's pace of selling Debtors has slowed

Debtors Turnover Ratio

Net Profit

Lowest at USD 231.24 MM

in the last five periods

MOJO Watch

Near term Net Profit trend is negative

Net Profit (USD MM)

EPS

Lowest at USD 0.59

in the last five periods

MOJO Watch

Declining profitability; company has created lower earnings for shareholders

EPS (USD)

Non Operating Income

Highest at USD 0.21 MM

in the last five periods

MOJO Watch

Increased income from non business activities may not be sustainable

Non Operating income