In today's rapidly changing and fiercely competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies. 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 | 75 | 23 | 18.32 | 8.45% | $0.35 | $0.91 | 13.36% |
| Adobe Inc | 50.01 | 16.29 | 13.98 | 9.18% | $2.06 | $4.41 | 3.23% |
| Salesforce Inc | 100.43 | 4.40 | 7.66 | 2.11% | $2.42 | $6.57 | 11.27% |
| SAP SE | 77.90 | 3.88 | 5.22 | 3.01% | $2.37 | $5.64 | 3.57% |
| Intuit Inc | 66.67 | 10.03 | 11.67 | 1.41% | $0.53 | $2.22 | 14.67% |
| Synopsys Inc | 63.79 | 12.49 | 13.42 | 5.77% | $0.48 | $1.27 | 24.51% |
| Workday Inc | 1153.21 | 10.99 | 10.40 | 1.76% | $0.23 | $1.42 | 16.67% |
| Roper Technologies Inc | 45.90 | 3.32 | 9.48 | 2.06% | $0.68 | $1.1 | 15.78% |
| Autodesk Inc | 56.34 | 34.48 | 9.67 | 17.93% | $0.37 | $1.29 | 10.47% |
| Palantir Technologies Inc | 239.86 | 11.45 | 17.65 | 2.33% | $0.09 | $0.45 | 16.8% |
| Ansys Inc | 64.17 | 6.16 | 14.36 | 1.12% | $0.11 | $0.39 | -2.9% |
| Splunk Inc | 221 | 129.22 | 6.36 | 121.15% | $0.14 | $0.86 | 14.8% |
| Zoom Video Communications Inc | 89.70 | 2.80 | 4.63 | 1.96% | $0.2 | $0.87 | 3.16% |
| PTC Inc | 82.09 | 7.54 | 9.62 | 1.73% | $0.16 | $0.43 | 7.62% |
| Tyler Technologies Inc | 113.08 | 6.18 | 9.28 | 1.67% | $0.11 | $0.23 | 4.54% |
| Dynatrace Inc | 94.60 | 8.97 | 12.49 | 2.04% | $0.05 | $0.29 | 25.91% |
| Bentley Systems Inc | 86.51 | 20.36 | 13.10 | 7.94% | $0.1 | $0.24 | 14.27% |
| AppLovin Corp | 144.75 | 12.42 | 4.93 | 8.25% | $0.31 | $0.6 | 21.2% |
| NICE Ltd | 42.95 | 4.17 | 6.05 | 2.89% | $0.16 | $0.41 | 8.4% |
| Average | 155.16 | 16.95 | 10.0 | 10.79% | $0.59 | $1.59 | 11.89% |
By carefully studying Cadence Design Sys, we can deduce the following trends:
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At 75.0, the stock's Price to Earnings ratio is 0.48x less than the industry average, suggesting favorable growth potential.
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The elevated Price to Book ratio of 23.0 relative to the industry average by 1.36x suggests company might be overvalued based on its book value.
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With a relatively high Price to Sales ratio of 18.32, which is 1.83x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a lower Return on Equity (ROE) of 8.45%, which is 2.34% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $350 Million, which is 0.59x below the industry average. This potentially indicates lower profitability or financial challenges.
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The company has lower gross profit of $910 Million, which indicates 0.57x below the industry average. This potentially indicates lower revenue after accounting for production costs.
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With a revenue growth of 13.36%, which surpasses the industry average of 11.89%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
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.
In light of the Debt-to-Equity ratio, a comparison between Cadence Design Sys and its top 4 peers reveals the following information:
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When considering the debt-to-equity ratio, Cadence Design Sys exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.21, which can be perceived as a positive aspect 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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