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 0.86% and a three-month decline of 6.84%, the company's stock price stands at $267.8, reflecting its substantial market resilience. A detailed evaluation using the GF Score indicates that Cadence Design Systems Inc is poised for significant growth, backed by solid financial and operational metrics.
What Is the GF Score?
The GF Score is a proprietary ranking system from GuruFocus, designed to predict stock performance by evaluating five key aspects of a company's financials. This system, which ranges from 0 to 100, has proven its effectiveness in correlating with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield better returns. Cadence Design Systems Inc boasts a GF Score of 97 out of 100, indicating a strong potential for market outperformance.
- 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 is a leading provider of electronic design automation (EDA) software, intellectual property, and system design and analysis products. With a market cap of $73.33 billion and annual sales of $4.16 billion, the company plays a crucial role in automating the chip design process. This enhances design accuracy, productivity, and complexity in a full-flow end-to-end solution. Cadence's extensive portfolio benefits from the mutual convergence of semiconductor companies moving up-stack toward systems-like companies, and systems companies moving down-stack toward in-house semiconductor design.
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 17.31, 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 capital structure.
Profitability and Growth Metrics
The company's profitability is impressive, with an Operating Margin increase to 30.86% in 2023 from 21.42% in 2019. Cadence Design Systems Inc also shows strong growth, with a 3-Year Revenue Growth Rate of 16.1%, outperforming 66.64% of its industry peers. The consistent increase in EBITDA further highlights its growth capabilities.
Conclusion
Considering Cadence Design Systems Inc's strong financial strength, impressive profitability, and robust growth metrics, the GF Score underscores 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.
