Analyzing Cadence Design Sys In Comparison To Competitors In Software Industry

In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Cadence Design Sys CDNS alongside its primary competitors in the Software industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within the industry.

Cadence Design Sys Background

Cadence Design Systems is a provider of electronic design automation software, intellectual property, and system design and analysis products. EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution. Cadence offers a portfolio of design IP, as well as system design and analysis products, which enable system-level analysis and verification solutions. Cadence's comprehensive portfolio is benefiting from a mutual convergence of semiconductor companies moving up-stack toward systems-like companies, and systems companies moving down-stack toward in-house semiconductor design. The resulting expansion in EDA customers, alongside secular digitalization of various end markets, benefits EDA vendors like Cadence.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Cadence Design Systems Inc 75.63 23.04 17.74 7.56% $0.34 $0.88 13.88%
Adobe Inc 50.17 16.10 13.60 9.17% $1.99 $4.31 10.31%
Salesforce Inc 128.02 3.43 6.13 2.19% $2.42 $6.49 11.44%
SAP SE 80.61 3.37 4.46 8.41% $1.8 $5.41 4.84%
Intuit Inc 62.64 8.56 10.39 0.51% $0.26 $2.0 12.34%
Synopsys Inc 72.93 12.40 13.66 5.7% $0.38 $1.18 19.2%
Roper Technologies Inc 45.10 3.14 9.12 2.21% $0.68 $1.07 16.81%
Autodesk Inc 52.02 37.16 8.73 21.11% $0.29 $1.22 8.73%
Ansys Inc 48.41 5.13 11.68 1.43% $0.13 $0.43 4.8%
Zoom Video Communications Inc 133.98 2.71 4.28 2.69% $0.2 $0.87 3.57%
PTC Inc 56.26 6.64 8.39 2.4% $0.15 $0.43 17.27%
Tyler Technologies Inc 98.29 5.77 8.49 1.8% $0.1 $0.22 7.59%
Bentley Systems Inc 108.33 24.35 15.09 7.75% $0.07 $0.23 10.61%
Dynatrace Inc 97.57 8.22 11.45 2.31% $0.05 $0.27 24.55%
AppLovin Corp 779 8.93 5.02 4.69% $0.27 $0.49 -3.36%
Manhattan Associates Inc 87.29 72.91 14.95 22.54% $0.05 $0.12 20.37%
Average 126.71 14.59 9.7 6.33% $0.59 $1.65 11.27%

Through a meticulous analysis of Cadence Design Sys, we can observe the following trends:

  • A Price to Earnings ratio of 75.63 significantly below the industry average by 0.6x suggests undervaluation. This can make the stock appealing for those seeking growth.

  • With a Price to Book ratio of 23.04, which is 1.58x the industry average, Cadence Design Sys might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.

  • The Price to Sales ratio of 17.74, which is 1.83x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.

  • With a Return on Equity (ROE) of 7.56% that is 1.23% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

  • The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $340 Million is 0.58x below the industry average, suggesting potential lower profitability or financial challenges.

  • The gross profit of $880 Million is 0.53x below that of its industry, suggesting potential lower revenue after accounting for production costs.

  • The company's revenue growth of 13.88% is notably higher compared to the industry average of 11.27%, showcasing exceptional sales performance and strong demand for its products or services.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.

When evaluating Cadence Design Sys alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

  • Cadence Design Sys exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.22.

  • This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.

Key Takeaways

Cadence Design Sys has a low PE ratio compared to its peers in the Software industry, indicating that it may be undervalued. The high PB and PS ratios suggest that the company's stock price may be overvalued relative to its book value and sales. The high ROE indicates that Cadence Design Sys is generating strong returns on shareholder equity. The low EBITDA, gross profit, and revenue growth suggest that the company may be facing challenges in terms of profitability and revenue generation.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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