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Cadence Design
(NASDAQ:CDNS)
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Rating:71Outperform
Price Target:
$356.00
▲(7.26% Upside)
Action:Reiterated
Date:10/27/26
The score is driven primarily by strong financial performance (high margins, solid free cash flow, and improving leverage) and a notably upbeat earnings call with raised guidance and record backlog. Offsetting factors are a very high valuation multiple and a mixed technical picture with negative MACD and the stock below several key moving averages.
Positive Factors
Recurring platform model
Cadence’s subscription, maintenance, and support model provides recurring revenue and better visibility than purely transactional software sales. Deep integration across design, verification, signoff, and packaging workflows also raises switching costs, supporting renewals and customer expansion.
Negative Factors
Export-control exposure
Cadence’s financial outlook depends partly on export-control rules remaining broadly unchanged, making international customer access and revenue assumptions vulnerable to regulatory shifts. A materially tighter regime could reduce demand, delay transactions, or complicate serving affected customers.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring platform model
Cadence’s subscription, maintenance, and support model provides recurring revenue and better visibility than purely transactional software sales. Deep integration across design, verification, signoff, and packaging workflows also raises switching costs, supporting renewals and customer expansion.
Read all positive factors
Cadence Design Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where Cadence Design is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where Cadence Design is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyCadence Design (CDNS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$94.48B
Dividend YieldN/A
Average Volume (3M)2.38M
Price to Earnings (P/E)67.8
Beta (1Y)1.34
Revenue Growth14.70%
EPS Growth36.13%
CountryUS
Employees13,800
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)5.06
Shares Outstanding275,393,000
10 Day Avg. Volume2,255,394
30 Day Avg. Volume2,381,827
Financial Highlights & Ratios
PEG Ratio14.86
Price to Book (P/B)15.49
Price to Sales (P/S)16.01
P/FCF Ratio53.45
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue17.06
Enterprise Value/Gross Profit19.91
Enterprise Value/Ebitda44.39
Forecast
1Y Price Target
$423.23Price Target Upside27.52% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
EPS Forecast (FY)8.15
Revenue Forecast (FY)$6.32B
Cadence Design Business Overview & Revenue Model
Company Description
Cadence Design Systems, Inc. operates globally, delivering a comprehensive suite of solutions that includes software, specialized hardware, professional services, and pre-designed integrated circuit (IC) building blocks. The company's robust funct...
How the Company Makes Money
Cadence primarily makes money by licensing software and delivering related support and services, supplemented by sales and licensing of semiconductor IP.
1) Software licensing (primary revenue stream)
- Time-based licenses (subscription/term): Ca...
Cadence Design Earnings Call Summary
Earnings Call Date:Oct 26, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Feb 23, 2027
Earnings Call Sentiment Positive
The call was strongly positive, with record backlog, 22% Q3 revenue growth, raised 2026 guidance, broad-based product growth, accelerating Agentic AI adoption, and strong customer and hardware momentum. The main caveats were the sequential moderation in recurring revenue growth, higher hardware inventory, hardware quarter-to-quarter lumpiness, the near-term margin effect of the Hexagon D&E integration, and the outlook's export-control assumption.Positive Updates
Record Backlog and Raised Full-Year Outlook
Backlog reached a record $8.2 billion, reflecting strong bookings and growing customer demand. Cadence raised its 2026 revenue outlook to 21% growth and increased its EPS outlook by $0.30 to $8.40.
Negative Updates
Recurring Revenue Growth Moderated Sequentially
Recurring revenue growth was 18% year over year in Q3, compared with 20% cited for the prior quarter. Management said the comparison was affected by specific China revenue movements, with that revenue not present this year.
Read all updates
Q3-2026 Updates
Positive
Negative
Record Backlog and Raised Full-Year Outlook
Backlog reached a record $8.2 billion, reflecting strong bookings and growing customer demand. Cadence raised its 2026 revenue outlook to 21% growth and increased its EPS outlook by $0.30 to $8.40.
Read all positive updates
Company Guidance
Cadence raised its revenue outlook for the year to 21% growth and its EPS outlook by $0.30 to $8.40; for 2026, it expects revenue in the range of $6.387 billion to $6.417 billion, GAAP operating margin in the range of 28.2% to 29.2%, Non GAAP operating margin in the range of 44.2% to 45.2%, GAAP EPS in the range of $4.84 to $4.90, Non-GAAP EPS in the range of $8.37 to $8.43, operating cash flow of approximately $2 billion, and to use more than 50% of its free cash flow to repurchase Cadence shares in 2026; at the midpoint, it expects revenue growth of 21%, operating margin of 44.7%, and EPS of $8.40. For Q4, it expects revenue in the range of $1.695 billion to $1.725 billion, GAAP operating margin in the range of 30% to 31%, Non GAAP operating margin in the range of 44% to 45%, GAAP EPS in the range of $1.23 to $1.29, and non GAAP EPS in the range of $2.19 to $2.25, assuming export control regulations that exist today remain substantially similar for the remainder of the year.Cadence Design Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
82
Very Positive
Cash Flow
79
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.13B | 5.30B | 4.64B | 4.09B | 3.56B | 2.99B |
| Gross Profit | 5.25B | 4.57B | 3.99B | 3.65B | 3.19B | 2.68B |
| EBITDA | 2.36B | 1.87B | 1.67B | 1.46B | 1.20B | 916.12M |
| Net Income | 1.38B | 1.11B | 1.06B | 1.04B | 848.95M | 695.96M |
Balance Sheet | ||||||
| Total Assets | 12.22B | 10.15B | 8.97B | 5.67B | 5.14B | 4.39B |
| Cash, Cash Equivalents and Short-Term Investments | 1.45B | 3.00B | 2.78B | 1.14B | 886.82M | 1.09B |
| Total Debt | 2.81B | 2.48B | 2.59B | 764.41M | 887.41M | 454.71M |
| Total Liabilities | 5.35B | 4.68B | 4.30B | 2.27B | 2.39B | 1.65B |
| Stockholders Equity | 6.88B | 5.47B | 4.67B | 3.40B | 2.75B | 2.74B |
Cash Flow | ||||||
| Free Cash Flow | 1.76B | 1.59B | 1.12B | 1.25B | 1.12B | 1.03B |
| Operating Cash Flow | 1.97B | 1.73B | 1.26B | 1.35B | 1.24B | 1.10B |
| Investing Cash Flow | -2.33B | -460.52M | -837.12M | -412.25M | -738.63M | -292.95M |
| Financing Cash Flow | -920.45M | -948.98M | 1.24B | -803.57M | -657.05M | -643.79M |
Cadence Design Technical Analysis
Positive
331.90
Price Trends
319.17
Positive
339.33
Positive
327.28
Positive
Market Momentum
0.74
Positive
58.05
Neutral
57.04
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CDNS, the sentiment is Positive. The current price of 331.9 is below the 20-day moving average (MA) of 336.11, above the 50-day MA of 319.17, and above the 200-day MA of 327.28, indicating a bullish trend. The MACD of 0.74 indicates Positive momentum. The RSI at 58.05 is Neutral, neither overbought nor oversold. The STOCH value of 57.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CDNS.
Cadence Design Risk Analysis
Cadence Design disclosed 43 risk factors in its most recent earnings report. Cadence Design reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cadence Design Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $15.51B | 49.62 | 9.34% | ― | 8.19% | 6.70% | |
72 Outperform | $50.60B | 31.16 | 52.50% | ― | 18.70% | 59.41% | |
71 Outperform | $94.48B | 67.80 | 19.56% | ― | 14.70% | 36.13% | |
69 Neutral | $12.51B | 88.59 | 7.75% | ― | 21.08% | ― | |
64 Neutral | $119.04B | -106.11 | -53.56% | ― | 32.04% | 23.46% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
53 Neutral | $59.68B | -1.47 | -60.79% | 0.08% | 7.79% | -742.51% |
* Technology Sector Average
CDNS
Cadence Design
343.08
1.78
0.52%
ADSK
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242.10
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-22.17%
MSTR
Strategy
141.40
-143.24
-50.32%
TYL
Tyler Technologies
378.62
-132.06
-25.86%
HUBS
HubSpot
250.79
-218.83
-46.60%
SNOW
Snowflake
337.42
70.37
26.35%
Cadence Design Corporate Events
Business Operations and StrategyStock Buyback
Cadence Design Expands Share Repurchase Authorization by $2.5B
Positive
Oct 26, 2026
On October 23, 2026, Cadence Design Systems’ board of directors authorized an additional $2.5 billion for repurchases of the company’s common stock under its existing share buyback program. The expanded authorization enables the compan...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.