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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#1207
Positioning
Market Dominance
Services
Computer Software
$95.7B
Anirudh Devgan
Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks. The company offers functional verification services, including emulation and prototyping hardware. It also provides digital IC design and sign off products, including Genus logic synthesis and Joules RTL power solutions.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = CDNS ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$YALA Yalla Group Ltd | 75 | 89 | 99 | 80 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$GRVY GRAVITY Co., Ltd. | 75 | 82 | 96 | 71 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$ISSC INNOVATIVE SOLUTIONS & SUPPORT INC | 73 | 81 | 88 | 94 | 25.0x | 14.1x | 17.1% | 10.3% | 35.5% | 14.6% | 10.1% | 105.2% | 0.0% | 41.0x | $244M | VS | |
$AER AerCap Holdings N.V. | 72 | 60 | 87 | 84 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$HCSG HEALTHCARE SERVICES GROUP INC | 72 | 74 | 88 | 88 | 7.1x | 6.1x | 28.9% | 20.8% | 20.8% | 9.9% | 9.3% | 8.5% | 0.0% | 1.0x | $1.2B | VS | |
$LQDT LIQUIDITY SERVICES INC | 72 | 90 | 88 | 68 | 24.9x | 14.3x | 14.1% | 8.3% | 45.7% | 8.5% | 6.2% | 28.1% | 0.0% | 0.0x | $736M | VS | |
$TRTNpA Triton International Ltd | 71 | 70 | 89 | 70 | - | 1.7x | 0.0% | - | 97.4% | 58.0% | 37.4% | - | 8.8% | 264.0x | $2.5B | VS | |
$EDU New Oriental Education & Technology Group Inc. | 71 | 83 | 52 | 77 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$NTES NetEase, Inc. | 71 | 88 | 93 | 68 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$UTI UNIVERSAL TECHNICAL INSTITUTE INC | 70 | 86 | 86 | 72 | 43.2x | 16.0x | 15.3% | 5.8% | 100.0% | 6.9% | 5.2% | 15.1% | 0.0% | 24.0x | $1.8B | VS | |
$CDNS CADENCE DESIGN SYSTEMS INC | 56 | 64 | 48 | 64 | 84.1x | 58.5x | 17.5% | 9.4% | 86.0% | 27.2% | 18.9% | 26.2% | 0.0% | 85.0x | $95.7B | ||
| SECTOR BENCH | - | - | - | - | - | 23.7x | 11.7x | 5.7% | 2.4% | 64.6% | 4.5% | 2.8% | 8.6% | 0.0% | 0.3x | - | REF |
CADENCE DESIGN SYSTEMS INC (CDNS) receives a "Hold" rating with a composite score of 55.5/100. It ranks #1207 out of 7,333 stocks in our coverage universe and carries a 3-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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Outperforming peers — winners tend to keep winning over 3-12 months
Fair valuation relative to peers
High profitability & efficiency — strong quality floor supports entry
Low volatility — smoother ride and historically better risk-adjusted returns
Moderate investment profile
Mid-range overall rating
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Relative valuation derived from Services sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for CDNS.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 64 | 80 | -16DRAG |
| MOMENTUM | 64 | 71 | -7DRAG |
| VALUATION | 48 | 48 | 0NEUTRAL |
| INVESTMENT | 38 | 63 | -25DRAG |
| STABILITY | 68 | 74 | -6DRAG |
| SHORT INT | 63 | 78 | -15DRAG |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROE proxy 17.5% (sector 5.7%)
GM 86% vs sector 65%, OM 27% vs sector 5%
Capital turnover N/A
Rev growth 26%, 10yr history
Interest coverage 12.8x, Net debt/EBITDA -0.2x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
We rate CADENCE DESIGN SYSTEMS INC (CDNS) as a Hold with a composite score of 55.5/100 at a current price of $290.98. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling.
CADENCE DESIGN SYSTEMS INC holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 55.5/100 places it at rank #1207 in our full universe.
The near-term outlook is constructive, with revenue growing at 26% and momentum in the 64th percentile confirming positive market sentiment. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy.
Narrow
Medium
Standard
Fair Value
Gross margins of 86% signal strong pricing power.
Returns on equity of 17.5% exceed cost of capital.
Stable competitive position in a defensive sector.
Elevated P/E ratio of 84.1x leaves little room for execution misses.
Vulnerability to macroeconomic shocks and interest rate volatility.
CADENCE DESIGN SYSTEMS INC represents a hold based on multi-factor quantitative performance.
Our model assigns CADENCE DESIGN SYSTEMS INC a Hold rating, with a composite score of 55.5/100 and 3 out of 5 stars. Ranked #1207 of 7,333 stocks, CDNS presents a mixed quantitative picture — neither compelling enough to initiate new positions nor weak enough to warrant selling. Investors already holding may consider maintaining their position while monitoring for changes in the factor profile.
With a quality score of 64/100, CDNS shows adequate but unremarkable business quality. The company reports a return on equity of 17.5% (sector avg: 5.7%), gross margins of 86.0% (sector avg: 64.6%), net margins of 18.9% (sector avg: 2.8%). This suggests the company generates acceptable returns but may lack the competitive positioning or operational efficiency to stand out from peers.
With a value score of 48/100, CDNS appears somewhat expensive relative to its fundamentals. Key valuation metrics include a P/E ratio of 84.11x, an EV/EBITDA of 58.49x, a P/B ratio of 14.73x. Investors paying a premium here are likely betting on above-average growth or margin expansion to justify current prices.
CADENCE DESIGN SYSTEMS INC's investment score of 38/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of 26.2% vs. a sector average of 8.6% and a return on assets of 9.4% (sector: 2.4%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
CDNS demonstrates moderate momentum with a score of 64/100, suggesting a neutral price trend without strong directional conviction. Revenue growth stands at 26.2% year-over-year, while a beta of 1.32 reflects its sensitivity to broader market moves. Moderate momentum may indicate the stock is consolidating or transitioning between trends, warranting close monitoring of upcoming catalysts.
CDNS shows good financial stability with a score of 68/100. Key stability metrics include a beta of 1.32 and a debt-to-equity ratio of 85.00x (sector avg: 0.3x). This suggests manageable leverage and moderate price volatility, making it appropriate for investors seeking a balance between growth potential and capital preservation.
CDNS carries a short interest score of 63/100, indicating moderate short selling activity. This is a neutral reading — not enough to signal systemic bearishness, but worth monitoring. Specific risk factors include above-average market sensitivity (beta: 1.32), elevated leverage (D/E: 85.00x). At $95.7B market cap (large-cap), CADENCE DESIGN SYSTEMS INC offers reasonable institutional liquidity.
CADENCE DESIGN SYSTEMS INC is a large-cap company in the Services sector, ranked #0 of 50 in its sector (100th percentile) and #1207 of 7,333 overall (84th percentile). Key comparisons include ROE of 17.5% exceeding the 5.7% sector median and operating margins of 27.2% above the 4.5% sector average. This top-quartile standing reflects exceptional competitive strength relative to Services peers.
While CDNS currently exhibits a HOLD profile, superior opportunities exist within the SERVICES sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
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Investment (38) is the limiting factor — improvement here would lift the composite score most.
EV/EBITDA 399% ABOVE SECTOR MEDIAN
ROE 205% ABOVE SECTOR MEDIAN (FAVORABLE)
Gross Margin 33% ABOVE SECTOR MEDIAN (FAVORABLE)
Above 50MA
37.18%
Net New Highs
+51081
About CADENCE DESIGN SYSTEMS INC Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verific
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