Synopsys Inc (SNPS, Financial) has recently garnered significant attention from investors and financial analysts, thanks to its strong financial position. With its shares currently priced at $615.86, Synopsys Inc has experienced a daily gain of 1.46% and a three-month change of 7.19%. A detailed analysis, underscored by the GF Score, indicates that Synopsys Inc is poised for substantial 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: financial strength, profitability, growth, GF Value, and momentum. These aspects are weighted differently and have been backtested from 2006 to 2021, showing a strong correlation with long-term stock performance. Stocks with higher GF Scores typically yield higher returns. For Synopsys Inc, the GF Score is an impressive 92 out of 100, indicating a high potential for outperformance.
Understanding Synopsys Inc's Business
Synopsys Inc, with a market cap of $94.36 billion and annual sales of $6.19 billion, operates at an operating margin of 23.42%. The company is a leading provider of electronic design automation (EDA) software, intellectual property, and software integrity products. Its EDA software automates the chip design process, enhancing design accuracy and productivity. Synopsys Inc is well-positioned to benefit from the digitalization of various end markets and the convergence of semiconductor and systems companies.
Financial Strength Breakdown
Synopsys Inc's financial strength is robust, with an Interest Coverage ratio of 175.53, significantly above the benchmark set by Benjamin Graham. The company's Altman Z-Score of 16.81 indicates a strong defense against financial distress, and its low Debt-to-Revenue ratio of 0.1 further solidifies its financial health.
Profitability Rank Breakdown
Synopsys Inc's profitability is exemplary, with an increasing Operating Margin over the past five years, reaching 23.04% in 2023. The company's Gross Margin has also consistently improved, indicative of its efficiency in converting revenue into profit. The Piotroski F-Score and Predictability Rank further affirm its solid financial standing and operational consistency.
Growth Rank Breakdown
Synopsys Inc is recognized for its strong growth, with a 3-Year Revenue Growth Rate of 16.7%, outperforming a significant portion of its industry peers. The company's EBITDA growth rates over the past three and five years highlight its sustained ability to expand and generate increased earnings.
Conclusion
Considering Synopsys Inc's robust 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 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.
