In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating Cadence Design Sys CDNS against its key competitors in the Software industry. By examining key financial metrics, market position, and growth prospects, we aim to provide valuable insights for 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 | 78.28 | 24.01 | 19.12 | 8.45% | $0.35 | $0.91 | 13.36% |
| Adobe Inc | 50.43 | 16.43 | 14.10 | 9.18% | $2.06 | $4.41 | 3.23% |
| Salesforce Inc | 101.41 | 4.44 | 7.74 | 2.11% | $2.42 | $6.57 | 11.27% |
| SAP SE | 77.15 | 3.84 | 5.17 | 3.01% | $2.37 | $5.64 | 3.57% |
| Intuit Inc | 68.92 | 10.37 | 12.06 | 1.41% | $0.53 | $2.22 | 14.67% |
| Synopsys Inc | 65.41 | 12.81 | 13.76 | 5.77% | $0.48 | $1.27 | 24.51% |
| Workday Inc | 1140.42 | 10.87 | 10.28 | 1.76% | $0.23 | $1.42 | 16.67% |
| Roper Technologies Inc | 47.07 | 3.41 | 9.72 | 2.06% | $0.68 | $1.1 | 15.78% |
| Autodesk Inc | 57.81 | 35.38 | 9.93 | 17.93% | $0.37 | $1.29 | 10.47% |
| Palantir Technologies Inc | 249.57 | 11.92 | 18.36 | 2.33% | $0.09 | $0.45 | 16.8% |
| Ansys Inc | 64.93 | 6.23 | 14.53 | 1.12% | $0.11 | $0.39 | -2.9% |
| Splunk Inc | 220.43 | 128.89 | 6.34 | 121.15% | $0.14 | $0.86 | 14.8% |
| Zoom Video Communications Inc | 97.01 | 3.03 | 5.01 | 1.96% | $0.2 | $0.87 | 3.16% |
| PTC Inc | 85.30 | 7.83 | 10 | 1.73% | $0.16 | $0.43 | 7.62% |
| Tyler Technologies Inc | 112.32 | 6.14 | 9.21 | 1.67% | $0.11 | $0.23 | 4.54% |
| Dynatrace Inc | 95.50 | 9.05 | 12.61 | 2.04% | $0.05 | $0.29 | 25.91% |
| Bentley Systems Inc | 96.27 | 22.66 | 14.58 | 7.94% | $0.1 | $0.24 | 14.27% |
| AppLovin Corp | 145.18 | 12.46 | 4.95 | 8.25% | $0.31 | $0.6 | 21.2% |
| Manhattan Associates Inc | 81.68 | 63.42 | 15.27 | 25.97% | $0.05 | $0.13 | 20.36% |
| Average | 158.71 | 20.51 | 10.76 | 12.08% | $0.58 | $1.58 | 12.55% |
By carefully studying Cadence Design Sys, we can deduce the following trends:
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With a Price to Earnings ratio of 78.28, which is 0.49x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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With a Price to Book ratio of 24.01, which is 1.17x 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.
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With a relatively high Price to Sales ratio of 19.12, which is 1.78x the industry average, the stock might be considered overvalued based on sales performance.
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The Return on Equity (ROE) of 8.45% is 3.63% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $350 Million, which is 0.6x below the industry average. This potentially indicates lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $910 Million, which indicates 0.58x below the industry average, potentially indicating lower revenue after accounting for production costs.
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With a revenue growth of 13.36%, which surpasses the industry average of 12.55%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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.
By analyzing Cadence Design Sys in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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Cadence Design Sys demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.21, the company relies less on debt financing and maintains a healthier balance between debt and equity, which can be viewed positively by investors.
Key Takeaways
The valuation analysis for Cadence Design Sys in the software industry reveals that its PE ratio is low compared to its peers, indicating potential undervaluation. The PB ratio is high, suggesting that the market values the company's assets more than its earnings. The PS ratio is also high, indicating that investors are willing to pay a premium for the company's sales. On the other hand, the company's low ROE, EBITDA, gross profit, and revenue growth suggest that it may be facing challenges in generating profits and expanding its business compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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