📊 CDNS Key Takeaways
Is Cadence Design Systems Inc. (CDNS) a Good Investment?
Cadence demonstrates strong fundamental health with 14.1% revenue growth, healthy 29.3% operating margins, and robust free cash flow of $307M (20.8% margin). However, net income growth of only 5.1% significantly trails revenue growth, indicating margin compression and declining capital efficiency (ROE: 5.1%, ROA: 2.8%) despite a fortress balance sheet with zero debt.
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.
Cadence Design Systems Inc. Key Strengths (CDNS)
- Strong top-line growth of 14.1% YoY with $1.5B revenue demonstrates market demand
- Excellent free cash flow generation of $307M with 20.8% FCF margin showing high-quality earnings
- Conservative balance sheet with zero debt (Debt/Equity: 0.00x) and substantial cash reserves of $1.4B providing financial flexibility
- Healthy operating margin of 29.3% and net margin of 22.8% typical of strong software platforms
- 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
- Net income growth (5.1%) significantly lags revenue growth (14.1%), indicating concerning margin compression or expense acceleration
- Very low returns on equity (5.1%) and assets (2.8%) despite high absolute profitability suggest capital inefficiency or value-destructive capital allocation
- Elevated insider trading activity (20 Form 4 filings in 90 days) warrants monitoring for potential negative signals
- Divergence between revenue and earnings growth trajectory raises questions about cost structure sustainability
- 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
- Operating expense trends relative to revenue growth - critical to understand margin compression drivers
- Return on Equity and Return on Assets trends - need to see improvement in capital efficiency
- Operating cash flow sustainability - ensure strong FCF is maintained as company scales
- 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 20.8% free cash flow margin provides substantial flexibility for dividends, buybacks, and strategic investments.
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 |
|---|---|---|---|
| Q1 2026 | $1.2B | $273.6M | $1.00 |
| 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 |
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
| Date | Form | Document | Action |
|---|---|---|---|
| Jun 3, 2026 | 4 | xslF345X06/wk-form4_1780529197.xml | View → |
| Jun 3, 2026 | 4 | xslF345X06/wk-form4_1780529107.xml | View → |
| May 27, 2026 | 4 | xslF345X06/wk-form4_1779919725.xml | View → |
| May 27, 2026 | 4 | xslF345X06/wk-form4_1779919717.xml | View → |
| May 20, 2026 | 4 | xslF345X06/wk-form4_1779313182.xml | View → |
❓ Frequently Asked Questions about CDNS
What is the AI rating for CDNS?
Cadence Design Systems Inc. (CDNS) has a Combined AI Grade of A from Claude (A) and ChatGPT (A) with 80% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are CDNS's key strengths?
Claude: Strong top-line growth of 14.1% YoY with $1.5B revenue demonstrates market demand. Excellent free cash flow generation of $307M with 20.8% FCF margin showing high-quality earnings. 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: Net income growth (5.1%) significantly lags revenue growth (14.1%), indicating concerning margin compression or expense acceleration. Very low returns on equity (5.1%) and assets (2.8%) despite high absolute profitability suggest capital inefficiency or value-destructive capital allocation. 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 $1.5B.
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 $1.23.
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 grade reflects both perspectives for balanced insights.
What is CDNS's fundamental grade?
Based on our AI fundamental analysis in June 2026, Cadence Design Systems Inc. has a A grade with 80% 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 5.1% (sector avg: 22%), net margin of 22.8% (sector avg: 18%). Compare these metrics with sector averages to assess valuation.
What is CDNS's AI grade for 2026?
Our dual AI analysis gives Cadence Design Systems Inc. a combined A grade 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 $355.8M, with capital expenditures of $48.8M. FCF margin is 20.8%.
How does CDNS compare to other Technology stocks?
Vs Technology sector averages: Net margin 22.8% (avg: 18%), ROE 5.1% (avg: 22%), current ratio 1.47 (avg: 2.5).