Cadence Design SystemsCDNS -1.12%99 Gross Margin % is 85.45% as of Mar. 2026, which is 3% below its 10-year median of 88.25. GuruFocus rates CDNS with a GF Score™ of 99/100 and a GF Value™ of $376.87 (Fairly Valued). The stock has 4 warning signs investors should review. Among 2,683 Software companies, Cadence Design Systems ranks better than 92.81% on this metric.
CDNS's Gross Margin % is ranked better than 92.81% of 2683
companies
in the Software industry
Industry Median: 40.45
vs CDNS: 86.08
Cadence Design Systems had a gross margin of 85.45% for the quarter that ended in Mar. 2026 => Durable competitive advantage
The 5-Year average Growth Rate of Gross Margin for Cadence Design Systems was -0.70% per year.
Cadence Design Systems (NAS:CDNS) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Cadence Design Systems had a gross margin of 85.45% for the quarter that ended in Mar. 2026 => Durable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Cadence Design Systems Gross Margin % Related Terms
Cadence Design Systems Gross Margin % Historical Data
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The historical data trend for Cadence Design Systems's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
CDNS vs ADBE, INTU, ADP: Gross Margin % Comparison
For the Software - Application subindustry, Cadence Design Systems's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Cadence Design Systems Gross Margin % vs Software Industry
For the Software industry and Technology sector, Cadence Design Systems's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Cadence Design Systems's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Cadence Design Systems (CDNS) has a Gross Margin % of 85.45% as of Mar. 2026. Gross margin is the ratio of total gross profit to net sales. View historical data on Cadence Design Systems and its competitors. This is near median its historical median of 88.25. Over the past decade, Cadence Design Systems' Gross Margin % has ranged from 85.88 to 89.73. According to the industry distribution chart, Cadence Design Systems ranks #193 out of 2683 companies in the Software industry, placing it in the top 7.2%.
Is Cadence Design Systems' Gross Margin % too high?
Cadence Design Systems' current Gross Margin % of 85.45% is near median its 10-year median of 88.25. Over the past 10 years, this metric has ranged from a low of 85.88 to a high of 89.73. The Software industry median Gross Margin % is 40.45. Cadence Design Systems' value of 85.45% is 111.2% above this industry median. Based on the distribution chart, Cadence Design Systems ranks #193 out of 2683 companies in the Software industry, which is in the top quartile — a strong position relative to peers. Overall, Cadence Design Systems has a GF Score™ of 99/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Cadence Design Systems' Gross Margin % compare to ADBE and INTU?
According to the Software industry distribution chart, Cadence Design Systems ranks #193 out of 2683 companies for Gross Margin %. This places Cadence Design Systems in the top 7% of its industry — outperforming the majority of peers. The industry median Gross Margin % is 40.45. Cadence Design Systems' value of 85.45% is 111.2% above this benchmark. Historically, Cadence Design Systems' own Gross Margin % has ranged from 85.88 to 89.73 over the past decade. While the company's 10-year median is 88.25 vs. the industry median of 40.45, Cadence Design Systems has consistently been above the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Gross Margin % for a Software company?
The median Gross Margin % among Software companies is 40.45, based on 2,683 companies in the industry. Companies in the top quartile (top 25%) have a Gross Margin % significantly above this median, while those in the bottom quartile fall well below. However, Gross Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Cadence Design Systems's current Gross Margin % of 85.45% is 111.2% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Gross Margin % mean?
A high Gross Margin % can signal that a stock is expensive relative to its fundamentals. Gross margin is the ratio of total gross profit to net sales. View historical data on Cadence Design Systems and its competitors. For the Software industry, the median Gross Margin % is 40.45 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Cadence Design Systems's current Gross Margin % is 85.45%, which is near median its own 10-year median of 88.25. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Cadence Design Systems stock overvalued right now?
Based on GuruFocus' analysis, Cadence Design Systems (CDNS) is currently considered Fairly Valued. The stock's GF Value™ is $376.87, compared to a current price of $368.23 — trading 2.3% below its estimated fair value. The current Gross Margin % is 85.45%, which is near median its 10-year median of 88.25 and 111.2% above the Software industry median of 40.45. Cadence Design Systems' overall GF Score™ is 99/100 with 4 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Gross Margin % calculated?
Gross Margin % is calculated from a company's financial statements. For Cadence Design Systems (CDNS), the current Gross Margin % is 85.45% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Cadence Design Systems (CDNS) Overvalued in 2026?
Based on GuruFocus' analysis, Cadence Design Systems stock appears to be undervalued.
The current stock price of $368.23 is trading 2.3% below its estimated GF Value™ of $376.87.
GuruFocus considers Cadence Design Systems to be Fairly Valued.
Key valuation signals for CDNS:
Gross Margin %: 85.45% (near median its 10-year median of 88.25)
GF Value™: $376.87 vs. price of $368.23 (2.3% below fair value)
Industry Position: 111.2% above the Software median (#193 of 2683)
No single metric tells the full story. See the CDNS stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Cadence Design Systems is a provider of electronic design automation software, intellectual property, and system design and analysis products. EDA software automates and aids in 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 enables system-level analysis and verification solutions.
99GF Score
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