Synopsys Inc (SNPS, Financial) has recently captured the attention of investors and financial analysts with its strong financial performance. Currently trading at $495.41 per share, Synopsys Inc has experienced a daily increase of 1.09%, despite a three-month decline of -16.01%. A detailed analysis, supported by the GF Score, indicates that Synopsys 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: financial strength, profitability, growth, GF Value, and momentum. These aspects 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. Synopsys Inc boasts a GF Score of 97 out of 100, indicating a high potential for outperformance.
- Financial strength rank: 9/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 7/10
- Momentum rank: 8/10
Understanding Synopsys Inc's Business
Synopsys Inc, with a market cap of $76.1 billion and annual sales of $6.62 billion, is a leading provider of electronic design automation (EDA) software, intellectual property, and software integrity products. The company's EDA software streamlines the chip design process, enhancing design accuracy and productivity. Synopsys' software integrity business enables continuous management and testing of code bases for security and quality. The convergence of semiconductor and systems companies toward in-house chip design is expanding EDA customer bases, benefiting vendors like Synopsys.
Financial Strength Breakdown
Synopsys Inc's financial robustness is evident in its impressive Interest Coverage ratio of 75.99, significantly surpassing the benchmark of 5 set by investment guru Benjamin Graham. The company's Altman Z-Score of 13.81 indicates a strong buffer against financial distress, and a Debt-to-Revenue ratio of 0.1 showcases prudent debt management.
Profitability and Growth Metrics
Synopsys Inc's profitability is highlighted by its increasing Operating Margin, which has grown consistently over the past five years, reaching 23.04% in 2023. The company's Gross Margin also reflects a steady rise, maintaining around 79% in recent years. These figures demonstrate Synopsys' efficiency in converting revenue into profit.
The company's commitment to growth is underscored by a 3-Year Revenue Growth Rate of 16.7%, outperforming 67.99% of peers in the software industry. The consistent increase in EBITDA further emphasizes its growth capabilities.
Conclusion
Considering Synopsys Inc's strong financial strength, impressive profitability, and robust growth metrics, the GF Score highlights the company's exceptional position for potential market outperformance. Investors seeking 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.
