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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Cadence Design Systems, Inc. (XNAS:CDNS) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
CDNS
Name:
CADENCE DESIGN SYSTEMS, INC. (XNAS:CDNS)
Sector:
317.73M
Industry:
Software�Application
CEO:
Mr. Lip-Bu Tan
Total Employees:
9,300
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -100.49% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF CADENCE DESIGN SYSTEMS, INC.(CDNS) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SOFTWARE�APPLICATION INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
168.17
One Month Price Target:
$169.28
Six Month Price Target :
$174.82
Likely Price in One Year's Time:
Ticker:
$181.47
Likely Trading Range Today Under (Normal Volatility)
$167.73
Price Upper limit ($) :
$169.18
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$159.66
This week:
$149.15
This month :
$130.13
Other Primary facts
Market Cap:
45.96B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
273.87M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
13.39%
-12.6%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$207.56
$189.01
$128.78
$147.33
Medium risk (<10%) entry points
Buy Call
Sell Call
$182.98
Buy Put:
Sell Put:
$179.01
$153.31
$157.33
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
CDNS
Sharpe Ratio:
6.29%
Comparison:
CDNS, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 552.22% higher than the industry
& ratio is 175.82% higher than the market/S&P 500 average
Average Returns/Yield of
CDNS
Daily returns:
0.17%
Weekly returns:
0.84%
Monthly returns:
3.38%
Yearly returns:
9.94%
Comparison of returns:
Average annual returns/yield (last 3 years) is 307.78% above industry average
Classification:
CDNS, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.34
Statistical test of Returns:
CDNS has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.54%
Weekly Volatility:
5.69%
Monthly Volatility:
11.38%
Yearly Volatility:
39.43%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.87%
Volatility in last five trading days has been -65.65% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.06%
Weekly VaR:
-11.31%
Monthly VaR:
-22.62%
How Much Can the price of
CDNS
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-18%
Worst case (decline):
-78.36%
This translates to price declining to:
$137.80
This translates to price declining to:
$36.40
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
CDNS is a 59.65% riskier investment compared to the market/S&P 500 & is 36.77% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -29.20% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
CDNS
Beta in relation to market/S&P 500--1.18
Expected beta in 1 year's time:
0.792
Expected beta in 3 year's time:
1.121
Unlevered (debt free) Beta:
1.063
Beta in relation to Nasdaq (XNAS):
1.166
Beta in relation to all global stocks::
0.791
Beta Comparison & Analysis
Beta of competitors/peers::
1.139
Beta is 3.33% higher than peers
Average Industry Beta:
1.335
Beta is -11.91% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
27.23%
Sustainable growth rate is -12.46% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.293
Alpha is -1341.56% below industry average alpha yield
Alpha is 1866% higher than market/& is unsustainably high
Analysis of Cost of Capital of
CDNS
Equity cost of capital:
0.112
Equity cost of capital is -8.86% below industry mean WACC
Unlevered (without debt) cost of capital:
10.13%
Before-tax cost of debt:
4.85%
After-tax cost of debt:
3.83%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.83%
WACC is 17.40% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$11.52
Revenue growth rate per share of (3Y):
16.69
Annual revenue growth rate is -69.17% below industry average
EPS:
$2.68
Expected Annual growth rate of EPS (3Y):
-11.61%
Expected future EPS growth rate is -142.44% lower than the Software�Application industry
Free cash flow (FCF) per share:
$4.27
-
-
Debt per share
$1.27
EBITDA per share
$3.74
Valuation Analysis Today of
CDNS
P/E Ratio:
60.12
P/E Ratio of Competitors/Peers:
925.26
P/E ratio is -93.50% lower than main peers & is -66.15% lower than the industry
Stock price/value with industry average P/E ratio: $475.96
CDNS is -64.67% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
14.6
Price to sales ratio is 27.30% above the industry mean
P/B (Price to book value ratio):
16.69
Price to free cash flow: 39.38
Price to free cash flow ratio is -59.69% lower than the industry
Net income growth rate (3Y):
187.66%
Net income growth rate is -23.14% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
12.60%
Net debt to equity ratio:
-28.51%
Debt to assets ratio:
7.91%
Net debt to assets ratio:
-17.91%
Debt-to-asset ratio is -85.58% below industry average
Ability to repay debt:
Interest coverage ratio:
60.77
Interest coverage ratio is 14.39% more than industry average
Looking forward:
Debt growth rate:
33.15%
Annual debt growth is -96% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.759
Statistical significance of correlation:
CDNS has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.503
Stock price is 50.90% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.503
Correlation of price movement with Nasdaq (^IXIC):
-0.027
Covariance of price movement with the market:
-0.04
Kurtosis
2.784
Returns are, approximately, normally distributed (mesokurtic)
Skewness of returns:
-0.045
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
CDNS
Gross Profit Margin Ratio:
359%
Operating Profit Margin Ratio:
28.35%
Operating profit margin is -247.94% lower than the industry
Net Profit Margin Ratio:
359%
Effective Tax Rate:
15.05%
Effective tax rate is -42.95% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
26.96%
Return on equity (ROE) is -306.13% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
16.93%
Return on assets (ROA) is -540.83% lower than the industry
Financial Leverage:
1.1x
Current Ratio:
1.81
Current ratio is -39.72% below industry average
Cash Conversion Cycle (days):
75.2
Cash conversion cycle is -20.69% below industry average
The remaining useful life of property plant & equipment is: 3.5 years
Stock based compensation to net income ratio:
7.99%
In-depth Efficiency Analysis
Revenue generated per employee:
339.1K
Each employee generates -2% less revenue than industry average revenue per employee
EBITDA generated per employee:
110.2K
Each employee generates 926% more EBITDA than industry average revenue per employee
Profit generated per employee:
80.0K
Each employee generates -559% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
34.2K
Each employee generates -540% less free cash flow than industry average revenue per employee
Assets/Capital per employee
286.0K
Each employee generates -540% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 10.45%
Growth rate in R&D investment/expenditure is 583.43% higher than the industry
Competitors/Peer firms of
CDNS
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION (XNAS:CTSH)
MICROCHIP TECHNOLOGY INCORPORATED (XNAS:MCHP)
DATADOG, INC. (XNAS:DDOG)
CROWDSTRIKE HOLDINGS, INC. (XNAS:CRWD)
SYNOPSYS, INC. (XNAS:SNPS)
THE TRADE DESK, INC. (XNAS:TTD)
FORTINET, INC. (XNAS:FTNT)
Telefonaktiebolaget LM Ericsson (XNAS:ERIC)
ZSCALER, INC. (XNAS:ZS)
Current Analyst Ratings
Strong buy�8%
Buy�4%
Hold�21%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
4/2/22
Revenue:
3.15B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
320.89M
2.83B
1.15B
198.00M
765.63M
567.62M
19.97M
1.94B
-
16.87M
132.37M
1.03B
894.08M
744.12M
875.94M
131.81M
744.12M
Statement of Cash Flow
Date:
Period:
35.75M
Differed Income Tax :
- 24920.00K
Stock Based Compensation :
59.47M
Change in Working Capital :
28.92M
Accounts Receivables:
-
Other Working Capital:
56.23M
Other Non-Cash Items:
2.05M
Net Cash Provided by Operating Activities:
336.61M
Investments in PP&E:
- 18130.00K
Net Acquisitions:
-
Purchases of Investments:
- 1000.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
4/2/22
2022
Q1
1.13B
-
1.13B
361.79M
110.21M
128.14M
1.73B
310.69M
923.72M
219.11M
-
787.11M
419.54M
2.66B
-
4.40B
-
-
-
600.28M
360.55M
960.83M
347.79M
219.43M
674.06M
-
1.63B
2.55B
3.28B
- 47919.0K
-
April 2, 2022 at 6:00:00 AM
2.26B
2.76B
4.40B
-
347.79M
- 786960.0K
-
- 750.00K
- 19880.00K
-
45.67M
- 306359.00K
-
-
- 260686.00K
- 10230.00K
45.81M
1.13B
1.09B
336.61M
- 18880.00K
317.73M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
CDNS
2023
2024
2025
2026
2027
$182.38
$752.09
$811.55
$875.71
$944.94