Cadence Design Systems Inc (CDNS, Financial) has recently captured the attention of investors and financial analysts alike, thanks to its strong financial performance and promising market position. With a current share price of $282.15 and a modest daily gain of 0.54%, despite a three-month decline of -10.04%, the company's future growth prospects look promising. This optimism is further bolstered by the GF Score, which indicates that Cadence Design Systems Inc is poised for significant future growth.
What Is the GF Score?
The GF Score is a proprietary ranking system developed by GuruFocus, assessing stocks based on five key valuation aspects. These aspects have shown a strong correlation with long-term stock performance from 2006 to 2021. A higher GF Score typically indicates a higher potential for returns. Cadence Design Systems Inc boasts a GF Score of 95 out of 100, suggesting a high potential for outperformance based on its ranks in financial strength (8/10), profitability (10/10), growth (10/10), GF Value (6/10), and momentum (5/10).
Understanding Cadence Design Systems Inc's Business
Cadence Design Systems, with a market cap of $77.26 billion and annual sales of $4.16 billion, is a leading provider of electronic design automation (EDA) software, intellectual property, and system design and analysis products. The company's software streamlines the chip design process, enhancing design accuracy and productivity. Cadence's extensive portfolio benefits from the growing trend of semiconductor companies moving towards system-level solutions, expanding its customer base and strengthening its market position.
Financial Strength Breakdown
Cadence Design Systems Inc's financial robustness is evident in its impressive Interest Coverage ratio of 29.88 and an Altman Z-Score of 17.9, indicating a strong buffer against financial distress. The company's strategic debt management is reflected in its Debt-to-Revenue ratio of 0.32, underscoring its prudent financial practices.
Profitability Rank Breakdown
The company's profitability is equally impressive, with an Operating Margin that has consistently increased over the past five years, reaching 30.86% in 2023. This trend highlights Cadence Design Systems Inc's efficiency in converting sales into actual profits, further supported by a Predictability Rank of 4.0 stars, indicating reliable operational performance.
Growth Rank Breakdown
Cadence Design Systems Inc's commitment to growth is evident from its 16.1% 3-Year Revenue Growth Rate, outperforming 66.38% of its peers in the software industry. The company's EBITDA has also seen significant growth, with a three-year growth rate of 23.1%, emphasizing its ability to expand profitably.
Conclusion
Considering Cadence Design Systems Inc's strong financial strength, impressive profitability, and consistent growth metrics, the GF Score highlights the company's exceptional position for potential market outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores through the GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
