📊 CDNS Key Takeaways
Is Cadence Design Systems Inc. (CDNS) a Good Investment?
Cadence demonstrates exceptional fundamental strength with robust revenue growth of 14.1% YoY, industry-leading profitability margins (28.2% operating, 20.9% net), and strong cash generation (30% FCF margin). The company maintains fortress-like financial health with zero long-term debt, substantial cash reserves of $3.0B, and exceptional liquidity metrics, positioning it for sustainable long-term value creation.
Cadence shows high-quality fundamentals with double-digit revenue growth, strong operating profitability, and excellent free cash flow generation. The balance sheet appears conservative with substantial cash, strong liquidity, and essentially no leverage, which supports resilience and reinvestment capacity. Growth quality is solid, although net income and EPS are growing materially slower than revenue, suggesting some margin or expense pressure worth monitoring.
Why Buy Cadence Design Systems Inc. Stock? CDNS Key Strengths
- Exceptional profitability with 28.2% operating margin and 20.9% net margin, indicating pricing power and operational excellence
- Outstanding cash generation with $1.6B free cash flow and 30% FCF margin, providing capital for dividends, buybacks, or strategic investments
- Superior financial health with zero debt, $3.0B cash reserves, 2.86x current ratio, and 12.8x interest coverage, eliminating refinancing risks
- Consistent top-line growth of 14.1% YoY revenue growth with net income rising 5.1%, demonstrating sustainable business expansion
- Strong returns on capital with 20.3% ROE and 10.9% ROA, reflecting efficient deployment of shareholder capital
- Revenue growth of 14.1% with operating margin of 28.2% indicates strong scalable software economics
- Free cash flow of $1.59B and a 30.0% FCF margin show excellent cash conversion and financial flexibility
- Cash of $3.00B, current ratio of 2.86x, quick ratio of 2.67x, and 0.00x debt-to-equity reflect a very healthy balance sheet
CDNS Stock Risks: Cadence Design Systems Inc. Investment Risks
- Operating leverage exposure: revenue growth of 14.1% outpacing net income growth of 5.1% suggests rising operating expenses or one-time charges that may indicate margin pressure
- High insider trading activity with 14 Form 4 filings in 90 days warrants monitoring for potential insider concerns or normal equity compensation patterns
- Concentrated software sector exposure creates susceptibility to industry cyclicality, competitive pressures, and technology disruption risks
- Net income growth of 5.1% lagging revenue growth may indicate rising costs, mix shift, or margin compression
- Some balance sheet and gross margin data are unavailable, limiting full visibility into profitability structure and liabilities
- ROE of 20.3% is strong, but sustaining it will depend on continued execution in a competitive enterprise software market
Key Metrics to Watch
- Gross margin trends and transparency - currently unavailable but critical for understanding product mix and pricing dynamics
- Operating margin sustainability - monitor whether 28.2% can be maintained amid growth investments or faces compression
- Free cash flow conversion - track whether 30% FCF margin persists as revenue scales
- Operating expense growth rate relative to revenue growth to assess operating leverage trajectory
- Capital allocation decisions on deployment of $3.0B cash reserves for shareholder returns or acquisitions
- Operating margin and net margin trend
- Free cash flow growth relative to revenue growth
Cadence Design Systems Inc. (CDNS) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The 30.0% free cash flow margin provides substantial flexibility for dividends, buybacks, and strategic investments. Strong liquidity with a 2.86x current ratio provides a solid financial cushion.
CDNS Profit Margin, ROE & Profitability Analysis
CDNS vs Technology Sector: How Cadence Design Systems Inc. Compares
How Cadence Design Systems Inc. compares to Technology sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Cadence Design Systems Inc. Stock Overvalued? CDNS Valuation Analysis 2026
Based on fundamental analysis, Cadence Design Systems Inc. has mixed fundamental signals relative to the Technology sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Cadence Design Systems Inc. Balance Sheet: CDNS Debt, Cash & Liquidity
CDNS Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Cadence Design Systems Inc.'s revenue has grown significantly by 77% over the 5-year period, indicating strong business expansion. The most recent EPS of $3.82 reflects profitable operations.
CDNS Revenue Growth, EPS Growth & YoY Performance
CDNS Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $1.2B | $238.1M | $0.87 |
| Q2 2025 | $1.1B | $160.1M | $0.59 |
| Q1 2025 | $1.0B | $247.6M | $0.91 |
| Q3 2024 | $1.0B | $238.1M | $0.87 |
| Q2 2024 | $976.6M | $221.1M | $0.81 |
| Q1 2024 | $1.0B | $241.8M | $0.89 |
| Q3 2023 | $902.6M | $186.3M | $0.68 |
| Q2 2023 | $857.5M | $186.9M | $0.68 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Cadence Design Systems Inc. Dividends, Buybacks & Capital Allocation
CDNS SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Cadence Design Systems Inc. (CIK: 0000813672)
📋 Recent SEC Filings
❓ Frequently Asked Questions about CDNS
What is the AI rating for CDNS?
Cadence Design Systems Inc. (CDNS) has a Combined AI Rating of BUY from Claude (BUY) and ChatGPT (BUY) with 82% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are CDNS's key strengths?
Claude: Exceptional profitability with 28.2% operating margin and 20.9% net margin, indicating pricing power and operational excellence. Outstanding cash generation with $1.6B free cash flow and 30% FCF margin, providing capital for dividends, buybacks, or strategic investments. ChatGPT: Revenue growth of 14.1% with operating margin of 28.2% indicates strong scalable software economics. Free cash flow of $1.59B and a 30.0% FCF margin show excellent cash conversion and financial flexibility.
What are the risks of investing in CDNS?
Claude: Operating leverage exposure: revenue growth of 14.1% outpacing net income growth of 5.1% suggests rising operating expenses or one-time charges that may indicate margin pressure. High insider trading activity with 14 Form 4 filings in 90 days warrants monitoring for potential insider concerns or normal equity compensation patterns. ChatGPT: Net income growth of 5.1% lagging revenue growth may indicate rising costs, mix shift, or margin compression. Some balance sheet and gross margin data are unavailable, limiting full visibility into profitability structure and liabilities.
What is CDNS's revenue and growth?
Cadence Design Systems Inc. reported revenue of $5.3B.
Does CDNS pay dividends?
Cadence Design Systems Inc. does not currently pay dividends.
Where can I find CDNS SEC filings?
Official SEC filings for Cadence Design Systems Inc. (CIK: 0000813672) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is CDNS's EPS?
Cadence Design Systems Inc. has a diluted EPS of $4.06.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is CDNS a good stock to buy right now?
Based on our AI fundamental analysis in April 2026, Cadence Design Systems Inc. has a BUY rating with 82% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is CDNS stock overvalued or undervalued?
Valuation metrics for CDNS: ROE of 20.3% (sector avg: 22%), net margin of 20.9% (sector avg: 18%). Compare these metrics with sector averages to assess valuation.
Should I buy CDNS stock in 2026?
Our dual AI analysis gives Cadence Design Systems Inc. a combined BUY rating for 2026. Revenue is data pending, with profitability above sector average. Always conduct your own research.
What is CDNS's free cash flow?
Cadence Design Systems Inc.'s operating cash flow is $1.7B, with capital expenditures of $141.9M. FCF margin is 30.0%.
How does CDNS compare to other Technology stocks?
Vs Technology sector averages: Net margin 20.9% (avg: 18%), ROE 20.3% (avg: 22%), current ratio 2.86 (avg: 2.5).