# Cadence Design Systems (CDNS.US)

Canonical: https://gigainvestors.com/s/CDNS

Analysis as of: 2026-10-16T07:27:19.546Z. Financial observations: FY1996–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

A wonderful business at too high a price

Quality tests for Buy: pass (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $324.38 per share; close as of 2026-10-15.

Estimated value: low $79.14 per share, central $113.24 per share, high $132.26 per share. Buy at or below the central value $113.24 per share. Valuation as of 2026-10-16T07:27:19.546Z; scenarios are not confidence intervals.

Expected annual return: 5.5% at the stated quote. About 5.5% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 0 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 0

- Operating margin variation: 0.20×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.17×

- FY2018: 0.19×

- FY2019: 0.21×

- FY2020: 0.24×

- FY2021: 0.26×

- FY2022: 0.30×

- FY2023: 0.31×

- FY2024: 0.29×

- FY2025: 0.31×

- LTM to Jun 2026: 0.31×

### moat: pass

- ROIC, median of available years: 56.5%

- ROIC, second-lowest year: 45.5%

- Typical minus recent gross margin: 2.4 pp

- Typical gross margin (annual median): 88.2%

- Recent gross margin (lower of latest and 3-year median): 85.9%

- Years with nonpositive capital: 0

- Capital spending / revenue: 3.0%

- ROIC including acquisitions, ten-year median: 31.4%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 58.5%

- FY2018: 67.6%

- FY2019: 44.4%

- FY2020: 51.8%

- FY2021: 64.4%

- FY2022: 63.6%

- FY2023: 68.0%

- FY2024: 48.7%

- FY2025: 54.5%

- LTM to Jun 2026: 45.5%

### economics: pass

- Owner earnings / net income, 5-yr: 1.06×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $5.0B

- Net income, five-year total: $4.8B

- Return on incremental invested capital: >100%

- Working capital / revenue, annual change: 0.2 pp

- Working capital / revenue, change between three-year averages: 1.8 pp

- Working capital / revenue, final three-year average: 14.0%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.09×

- FY2022: 1.01×

- FY2023: 1.04×

- FY2024: 1.05×

- FY2025: 1.08×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- potential debt-funded buybacks (informational)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 58.5% vs 54.5%

- Per-share earnings: 0.73 to 3.85 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -1.3%

- Ordinary dilution, 5-year annual growth: -0.5%

- Market cap gain: $78B

- Cumulative retained earnings: $7.0B

- Diluted shares, 10-year annual growth: -1.3%

- Diluted shares, 5-year annual growth: -0.5%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 23.2%

- Per-share value change: $3.13

- Per-share value, starting three-year median: $0.73

- Per-share value, ending three-year median: $3.85

- Buybacks concentrated in cheaper years (correlation): 0.78

- Average buyback yield: 2.8%

- Buyback history: 10 years

- Debt-funded buybacks: Yes

- Acquisition spending: $2.7B

- Cumulative net income, 10 years: $7.1B

- ROIC, first three-year median: 58.5%

- ROIC, last three-year median: 54.5%

Chart: Earnings per share; fiscal year observations.

- FY2016: $0.70

- FY2017: $0.73

- FY2018: $1.23

- FY2019: $3.53

- FY2020: $2.11

- FY2021: $2.50

- FY2022: $3.09

- FY2023: $3.82

- FY2024: $3.85

- FY2025: $4.06

### accounting: pass

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -6.1%

- Receivables to sales index (DSRI): 1.22×

- Restructuring years, last five: 2

- Stock compensation / operating cash flow: 26.3%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.56×

- Accounting red flags: 1

- Goodwill and intangibles / equity: 0.63×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -11.5%

- FY2017: -11.0%

- FY2018: -10.5%

- FY2019: 7.7%

- FY2020: -8.0%

- FY2021: -9.2%

- FY2022: -7.6%

- FY2023: -5.4%

- FY2024: -2.3%

- FY2025: -6.1%

## Holders

- [David Hoeft](https://gigainvestors.com/DAC): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Allen Bond](https://gigainvestors.com/JIM): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Price needs cash profits to grow 21.2% a year for ten years · "Cadence lifts annual revenue forecast on sustained AI chip-design boom" (finance.yahoo.com, Apr 2026) · sales +10.2%

Story as of 2026-10-16T09:58:28.933Z; price observation 2026-10-15.

Price needs cash profits to grow 21.2% a year for ten years

- 2025-04-29: Cadence Design Systems (NasdaqGS:CDNS) Raises 2025 Earnings Guidance to US$5.15-5.23 Billion ([finance.yahoo.com](https://finance.yahoo.com/news/cadence-design-systems-nasdaqgs-cdns-172516227.html))

- 2025-07-28: Cadence lifts FY outlook after Q2 results top estimates; shares jump ([finance.yahoo.com](https://finance.yahoo.com/news/cadence-lifts-fy-outlook-q2-211938555.html))

- 2026-02-17: Cadence beats quarterly profit and revenue estimates on strong AI-linked demand ([finance.yahoo.com](https://finance.yahoo.com/news/cadence-beats-quarterly-profit-revenue-224610884.html))

- 2026-04-27: Cadence lifts annual revenue forecast on sustained AI chip-design boom ([finance.yahoo.com](https://finance.yahoo.com/sectors/technology/articles/cadence-lifts-annual-revenue-forecast-204810083.html))

### Sales · FY2025–2026

sales +10.2%; source https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm; observed 2026-02-19.

- FY2017: $1.9B 

- FY2018: $2.1B 

- FY2019: $2.3B 

- FY2020: $2.7B 

- FY2021: $3.0B 

- FY2022: $3.6B 

- FY2023: $4.1B 

- FY2024: $4.6B 

- FY2025: $5.3B 

- FY2026: $5.8B 

### Gross margin · FY2026

gross margin 85.9%; source https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm; observed 2026-02-19.

- FY2017: 87.8% 

- FY2018: 87.9% 

- FY2019: 88.6% 

- FY2020: 88.6% 

- FY2021: 89.7% 

- FY2022: 89.6% 

- FY2023: 89.4% 

- FY2024: 86.0% 

- FY2025: 86.4% 

- FY2026: 85.9% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software application; annual sales are USD 5.3 billion.

- Source: https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm (filed 2026-02-19); FY2025: revenue 5296759000; grossProfit 4574510000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); CDNS.US: Cadence Design Systems, Inc. develops computational, AI-driven software, hardware, and silicon intellectual property products and solutions. The company offers functional verification services, such as Jasper, a formal verification platform; Xcelium, a parallel logic simulation platform; Verisium, a generative AI solution; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification, as well as digital IC design and sign off products, including Innovus platform; and custom IC design and simulation product include Virtuoso, a platform to design and verify analog. It also provides Xcelium logic simulator and other front-end verification and virtual prototyping technologies; controllers and physical interfaces; PCI Express, universal accelerator and compute express links, and multiple memory interfaces; and Tensilica, a digital signal processor. In addition, the company's design IP portfolio includes serializer/deserializer, peripheral component interconnect, USB, and other standard protocols; and Secure-IC, a solution for embedded security IP. Additionally, it provides System Design and Analysis (SD&A) platform, a solution that enables end-to-end system-level design and verification across chips, packages, PCBs, and electronic systems; Allegro X and Orca X platforms for PCB and advanced packaging; Sigrity X for signal and power integrity; AIR for RF design; Fidelity for computational fluid dynamics; Celsius for thermal and airflow analysis; Clarity 3D solver for electromagnetic and power electronics analysis and simulation; Integrity 3D-IC solution for 3D-IC and multi-chiplet designs; the Optimality Intelligent System Explorer, Reality digital twin, and Millennium enterprise multiphasic platforms; Allegro system design platform; and molecular modeling and simulation solutions and services. The company has a strategic collaboration with NVIDIA. The company was incorporated in 1987 and is headquartered in San Jose, California.

### Why customers stay

Margins ranged from 86% to 89.4% during 2023–25; it earns 56.5% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2023: grossProfit / revenue = 89.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2024: grossProfit / revenue = 86%.

- Source: https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm (filed 2026-02-19); FY2025: grossProfit / revenue = 86.4%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); 10-year return on capital observations [[2017,0.5848862563190934],[2018,0.6763969090186974],[2019,0.4440976878377829],[2020,0.5180448642681519],[2021,0.6436607609427272],[2022,0.6357917762663702],[2023,0.6800440311912636],[2024,0.48747201434614196],[2025,0.5453821116166708],[2026,0.4553808450490006]]; median 0.5651341839678821. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 90% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm (filed 2026-02-19); Gross margin observations: [[2021,0.8972620709687696],[2022,0.8956618687947783],[2023,0.8936326432413216]]; range within 2 percentage points.

### Where the cash goes

Paid dividends in 5 of 10 years; bought back USD 925 million of shares.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2016: growth capex 0; upkeep 53712000; owner earnings 268962000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2017: growth capex 0; upkeep 57901000; owner earnings 261724000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2018: growth capex 0; upkeep 61503000; owner earnings 402995000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2019: growth capex 0; upkeep 74605000; owner earnings 1037163000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2020: growth capex 0; upkeep 94813000; owner earnings 645967000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2021: growth capex 0; upkeep 66881000; owner earnings 759776000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2022: growth capex 0; upkeep 124215000; owner earnings 860167000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2023: growth capex 0; upkeep 102503000; owner earnings 1083933000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2024: growth capex 0; upkeep 142542000; owner earnings 1107957000. Growth capex / owner earnings = 0.

- Source: https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm (filed 2026-02-19); FY2025: growth capex 0; upkeep 141871000; owner earnings 1200861000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); Dividend observations: [[2016,415000000],[2017,138867000],[2018,169921000],[2019,240580000],[2020,460028000],[2021,0],[2022,0],[2023,0],[2024,0],[2025,0]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm (filed 2026-02-19); FY2025: cash repurchases 925034000 USD.

### Are managers owners

Insiders own 0.3% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); CDNS.US SharesStats.PercentInsiders = 0.327 percentage points; cache date 2026-10-16.

### What could break it

"The growth of our business depends primarily on the semiconductor and electronics systems industries." (SEC filing, Feb 2026)

- Source: https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm (filed 2026-02-19); The growth of our business depends primarily on the semiconductor and electronics systems industries.

### What the price says

The price assumes cash profits grow 21.2% yearly over ten years; actual growth was 15.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); Ten-year compound average after fade. Initial solved rate 0.40689659014456425. Price 324.38; FX 1; discount 0.1; same compounder ten-year fade to terminal 0.03. FY2015 owner earnings/share 1.0431377320670376 → FY2025 4.393736828240253. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $25.58 per share

- 2016-11: $26.28 per share

- 2016-12: $25.22 per share

- 2017-01: $26.03 per share

- 2017-02: $30.90 per share

- 2017-03: $31.40 per share

- 2017-04: $32.57 per share

- 2017-05: $35.14 per share

- 2017-06: $33.49 per share

- 2017-07: $36.90 per share

- 2017-08: $39.29 per share

- 2017-09: $39.47 per share

- 2017-10: $43.16 per share

- 2017-11: $43.91 per share

- 2017-12: $41.82 per share

- 2018-01: $44.86 per share

- 2018-02: $38.77 per share

- 2018-03: $36.77 per share

- 2018-04: $40.06 per share

- 2018-05: $42.45 per share

- 2018-06: $43.31 per share

- 2018-07: $44.09 per share

- 2018-08: $47.04 per share

- 2018-09: $45.32 per share

- 2018-10: $44.57 per share

- 2018-11: $45.04 per share

- 2018-12: $43.48 per share

- 2019-01: $48.03 per share

- 2019-02: $57.25 per share

- 2019-03: $63.51 per share

- 2019-04: $69.38 per share

- 2019-05: $63.57 per share

- 2019-06: $70.81 per share

- 2019-07: $73.91 per share

- 2019-08: $68.48 per share

- 2019-09: $66.08 per share

- 2019-10: $65.35 per share

- 2019-11: $70.25 per share

- 2019-12: $69.36 per share

- 2020-01: $72.11 per share

- 2020-02: $66.14 per share

- 2020-03: $66.04 per share

- 2020-04: $81.13 per share

- 2020-05: $91.29 per share

- 2020-06: $95.96 per share

- 2020-07: $109.25 per share

- 2020-08: $110.91 per share

- 2020-09: $106.63 per share

- 2020-10: $109.37 per share

- 2020-11: $116.30 per share

- 2020-12: $136.43 per share

- 2021-01: $130.39 per share

- 2021-02: $141.09 per share

- 2021-03: $136.99 per share

- 2021-04: $131.77 per share

- 2021-05: $126.99 per share

- 2021-06: $136.82 per share

- 2021-07: $147.65 per share

- 2021-08: $163.48 per share

- 2021-09: $151.44 per share

- 2021-10: $173.11 per share

- 2021-11: $177.46 per share

- 2021-12: $186.35 per share

- 2022-01: $152.14 per share

- 2022-02: $151.43 per share

- 2022-03: $164.46 per share

- 2022-04: $150.85 per share

- 2022-05: $153.73 per share

- 2022-06: $150.03 per share

- 2022-07: $186.08 per share

- 2022-08: $173.77 per share

- 2022-09: $163.43 per share

- 2022-10: $151.39 per share

- 2022-11: $172.04 per share

- 2022-12: $160.64 per share

- 2023-01: $182.83 per share

- 2023-02: $192.94 per share

- 2023-03: $210.09 per share

- 2023-04: $209.45 per share

- 2023-05: $230.91 per share

- 2023-06: $234.52 per share

- 2023-07: $234.01 per share

- 2023-08: $240.44 per share

- 2023-09: $234.30 per share

- 2023-10: $239.85 per share

- 2023-11: $273.27 per share

- 2023-12: $272.37 per share

- 2024-01: $288.46 per share

- 2024-02: $304.38 per share

- 2024-03: $311.28 per share

- 2024-04: $275.63 per share

- 2024-05: $286.31 per share

- 2024-06: $307.75 per share

- 2024-07: $267.66 per share

- 2024-08: $268.93 per share

- 2024-09: $271.03 per share

- 2024-10: $276.12 per share

- 2024-11: $306.81 per share

- 2024-12: $300.46 per share

- 2025-01: $297.62 per share

- 2025-02: $250.50 per share

- 2025-03: $254.33 per share

- 2025-04: $297.74 per share

- 2025-05: $287.07 per share

- 2025-06: $308.15 per share

- 2025-07: $364.57 per share

- 2025-08: $350.43 per share

- 2025-09: $351.26 per share

- 2025-10: $338.69 per share

- 2025-11: $311.84 per share

- 2025-12: $312.58 per share

- 2026-01: $296.36 per share

- 2026-02: $301.40 per share

- 2026-03: $277.87 per share

- 2026-04: $329.59 per share

- 2026-05: $374.93 per share

- 2026-06: $375.32 per share

- 2026-07: $340.02 per share

- 2026-08: $338.78 per share

- 2026-09: $330.19 per share

- 2026-10: $334.20 per share

## Annual estimated value (USD per share)

- FY2016: low $11.64 per share, central $13.04 per share, high $14.91 per share

- FY2017: low $13.59 per share, central $15.14 per share, high $17.20 per share

- FY2018: low $14.09 per share, central $15.79 per share, high $18.05 per share

- FY2019: low $19.51 per share, central $21.87 per share, high $25.02 per share

- FY2020: low $22.89 per share, central $25.62 per share, high $29.25 per share

- FY2021: low $31.89 per share, central $35.78 per share, high $40.96 per share

- FY2022: low $37.15 per share, central $41.87 per share, high $48.14 per share

- FY2023: low $45.55 per share, central $51.29 per share, high $58.94 per share

- FY2024: low $65.48 per share, central $89.33 per share, high $103.21 per share

- FY2025: low $78.55 per share, central $109.73 per share, high $127.12 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T06:32:59.311Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/813672/000081367226000016/cdns-20251231.htm); period 2025-12-31, filed 2026-02-19.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.