Cadence Design Systems Inc (CDNS, Financial) has recently captured the attention of investors and financial analysts with its strong financial performance. Despite a slight daily loss of 0.01%, the company's stock price stands at $268.7, reflecting a three-month change of -13.81%. A detailed analysis, supported by the GF Score, indicates that Cadence Design Systems Inc is poised for significant growth in the foreseeable future.
What Is the GF Score?
The GF Score is a proprietary stock performance ranking system developed by GuruFocus. It evaluates stocks based on five key aspects of valuation, which have shown a strong correlation with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield higher returns. The GF Score ranges from 0 to 100, with 100 indicating the highest potential for outperformance. Cadence Design Systems Inc boasts a GF Score of 97, signaling strong future performance potential.
- Financial strength rank: 8/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 7/10
Understanding Cadence Design Systems Inc's Business
Cadence Design Systems is a leading provider of electronic design automation (EDA) software, intellectual property, and system design and analysis products. The company's EDA software automates the chip design process, improving design accuracy, productivity, and complexity in a comprehensive end-to-end solution. With a market cap of $73.58 billion and annual sales of $4.16 billion, Cadence benefits from the convergence of semiconductor and systems companies, expanding its customer base and enhancing its market position.
Financial Strength Breakdown
Cadence Design Systems Inc's robust balance sheet demonstrates resilience against financial volatility, reflecting prudent capital management. The company's Interest Coverage ratio stands at an impressive 29.88, indicating strong capability to cover interest obligations. Additionally, with an Altman Z-Score of 17.23, Cadence shows a strong defense against financial distress. The Debt-to-Revenue ratio of 0.32 further solidifies its financial health.
Profitability and Growth Metrics
Cadence Design Systems Inc's Profitability Rank is exemplary, with an Operating Margin that has consistently increased over the past five years, reaching 30.86% in 2023. The company's Growth Rank is equally impressive, with a 3-Year Revenue Growth Rate of 16.1%, outperforming 66.67% of peers in the Software industry. This sustained growth is further evidenced by a robust increase in EBITDA over recent years.
Conclusion
Considering Cadence Design Systems Inc's strong financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores using 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.
