Cadence Design Systems Inc (CDNS, Financial) has recently captured the attention of investors and financial analysts, thanks to its strong financial position. Despite a daily loss of 1.02% and a three-month decline of 6.33%, the company's stock price stands at $265.94, reflecting its substantial market resilience. 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 ranking system developed by GuruFocus, assessing stocks based on five key valuation aspects. These aspects have shown a strong correlation with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield better 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 exceptional growth prospects.
- Financial strength rank: 8/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 9/10
Understanding Cadence Design Systems Inc's Business
Cadence Design Systems Inc, with a market cap of $72.82 billion and annual sales of $4.16 billion, is a leading provider of electronic design automation (EDA) software, intellectual property, and system design and analysis products. The company's EDA software streamlines the chip design process, enhancing design accuracy and productivity. Cadence's extensive portfolio benefits from the growing trend of semiconductor companies moving towards system-level design, expanding its customer base and strengthening its market position.
Financial Strength Breakdown
Cadence Design Systems Inc's financial robustness is evident in its Interest Coverage ratio of 29.88 and an Altman Z-Score of 16.21, indicating a strong shield against financial distress. The company's strategic debt management is reflected in its Debt-to-Revenue ratio of 0.32, underscoring a prudent approach to leveraging.
Profitability and Growth Metrics
The Profitability Rank of Cadence Design Systems Inc is impressive, 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 strong, with a 3-Year Revenue Growth Rate of 16.1%, outperforming 66.69% of its peers in the software industry.
Conclusion
Considering Cadence Design Systems Inc's robust financial strength, impressive profitability, and consistent growth metrics, the GF Score highlights the company's unmatched 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.
