QualityDipStocks / Technology · Software
Cadence Design Systems CDNS
Not in a dip by our rules: 21% below its 52-week high.
A quality company trading well above our fair value estimate.
- Fair value est.
- $188.65−42%
- Market Value
- forming
- Off 52-wk high
- −21%
- Risk vs market
- Highbeta 1.62
5 bullish · 5 bearish See why
Key levels
Every level vs today’s $327.89
- Fair value est.base case$188.65−42.5%
- 52-wk lowlowest close, 1 year$265.66−19.0%
- PriceFri Oct 30 close$327.89you are here
- 52-wk highhighest close, 1 year$416.39+27.0%
Fair value estimate
How the range is computed
Ten-year free-cash-flow DCF. Same 10-year free-cash-flow model as the base: discount rate 9.5% ±1 point and growth 14.1% ±2 points. Bear = 10.5% and 12.1%; bull = 8.5% and 16.1% (both fade to 3%). A model estimate from public filings, not a forecast of where the price will go.
Price is above even the bull case.
What the price implies To be worth today’s price, CDNS’s free cash flow would need to grow about 25% a year for five years; our estimate uses 14%.
Risk vs market
How risk vs market is measured
One year of daily returns (Oct 30 to Oct 30, 252 sessions). Beta = how much CDNS moved for each 1% move in the S&P 500 (SPY); 1.0 moves with the market. Volatility is the yearly standard deviation of daily returns. Past behavior, not a forecast.
Swings much more than the market, and its own price swings are 3.2× the S&P 500’s.
- Beta vs S&P 500
- 1.62
- Volatility
- 41% vs 13% SPY
- Correlation SPY
- 0.50
- Correlation QQQ
- 0.54
Bull vs bear
Rule-based from the data on this page, strongest first. Not advice.
Top bullish points 5 of 5
GrowthSales grew 18% to $6.1B over the last 12 months vs the 12 months before (SEC filings).
ProfitabilityOperating margin of 29% over the last 12 months.
ProfitabilityReturn on equity of 23% over the last 12 months.
ProfitabilityReturn on invested capital of 17%, above the 9.5% discount rate our DCF uses.
QualityPasses all four of our quality checks: cash generation, returns on capital, growth and balance sheet.
Top bearish points 5 of 5
ValuationOur DCF fair value estimate is $188.65, 42% below the price.
ValuationP/E of 65.4× vs a 33.9× median for the 138 Technology companies we cover.
ProfitabilityReturn on equity fell 10 points in two fiscal years, to 20% in FY2025.
ProfitabilityOperating margin narrowed to 28.2% in FY2025 from 30.6% in FY2023 (SEC filings).
ValuationPrice / free cash flow of 51×: a rich price for the cash it generates today.
Who’s talking about it
Notable investors, executives, analysts and public figures on Cadence Design Systems in the last 48 hours. Headlines as published, each linked. Their words, not ours.
No notable mentions in the last 48 hours. Checked Nov 1, 9:09 PM ET.
Compare with peers
Closest in size in Software
All fundamentals
P/E 65.4 · FCF yield 2.0% · ROE 23%
Valuation
- P/E
- 65.4×3-yr-end avg 75.4× · Technology median 33.9×
- Price / FCF
- 51.2×
- FCF yield
- 2.0%
- EV / EBITDA
- 42.3×
- Price / sales
- 14.72×
- Price / book
- 13.13×
- Market cap
- $90.3Bprice × diluted shares
- Enterprise value
- $91.3B
Growth
- Revenue, 12 months
- $6.1B
- Sales growth, 12 months
- +17.6%vs the 12 months before
- Sales growth, 3 yrs
- +14.1%/yrfrom FY2022
- Diluted EPS, 12 months
- $5.03
- EPS growth, last FY
- +5.5%
- Net income, 12 months
- $1.4B
- Net income growth
- +30%12 months vs before
Profitability
- Gross margin
- n/agross profit isn't reported (common for service and financial companies)
- Operating margin
- 28.9%
- Net margin
- 22.5%
- FCF margin
- 28.8%
- Return on equity
- 23%
- Return on invested capital
- 17%
Balance sheet
- Cash & short-term inv.
- $1.5B
- Total debt
- $2.5B
- Net cash
- −$1.0B
- Debt / equity
- 0.36×
- Interest coverage
- 14.0×operating income / interest
Cash flow & returns
- Free cash flow, 12 months
- $1.8B
- FCF growth, 12 months
- +19%
- Dividend yield
- 0%
- Payout ratio
- n/anot reported in its SEC filings
- Buybacks, 12 months
- $1.0B1.1% of market cap
- Share count, 1 year
- +0.5%diluted shares vs a year ago
- Stock-based comp
- $543M
Trailing 12 months to Sep 30, 2026; balance sheet at Sep 30, 2026. From Cadence Design Systems’s SEC filings. Sparklines show up to six fiscal years. n/a means we don’t hold that number, with the reason. How each is computed.
Valuation details
DCF $188.65 · FCF value $153.48
Assumes 14.1% growth for 5 years (revenue grew 14.1% a year FY22–FY25), fading to 3%; 9.5% discount rate, 3% terminal growth. FCF base $6.41 a share (trailing 12 months to Sep 30, 2026), from the 10-Q filed Oct 28, 2026. Net debt $1.0B, not deducted.
Setup & signals
No setup armed
No setup armed, so there’s no trigger or stop to track yet. Reversal signal rules only arm once a company is in a dip.
Momentum & 52-week range
RSI 50 · 5 days +3.6%
The business
FCF $1.8B · Sales +22%
- Free cash flow, 12 months$1.8B
- Free-cash-flow yield1.9%
- Free-cash-flow margin29%
- Gross margin86%
- Operating margin30%
- Return on invested capital15%
- Return on equity22%
- Sales growth (latest quarter vs year-ago quarter)+22%
- Net debt / EBITDA0.6×
Information only, not investment advice. Fair value estimates and talking points are rule-based model output from public data and can be wrong; stop levels are reference points, not orders. How every number is computed.
Get a text when CDNS fires a reversal signal
One text when a published rule fires on CDNS or any of the 333 quality companies we track: the ticker, the price, the stop and a link to the numbers. Nothing else.