Cadence Design Systems, Inc. (CDNS)

FairStock Score: 46/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I see Cadence as a high-quality but conspicuously priced business. Its chip-design software and verification tools are deeply woven into engineering workflows, which helps explain a 23.23% ROE and a Piotroski F-score of 8/9 - both FairStock calculations. The balance sheet looks sound: debt-to-equity is 0.39 and the Altman Z-score is 11.32. ROCE is 10.61%, so the premium P/B needs scrutiny. Cash generation is real, with trailing free cash flow of $1.7B, though the 1.9% FCF yield is thin. Filed results show progress: in fiscal 2025, the year ended 2025-12-31, revenue was $5.3B, net income $1.1B, and diluted EPS $4.06, versus revenue of $4.6B, net income of $1.1B, and diluted EPS of $3.85 in fiscal 2024, the year ended 2024-12-31. In fiscal Q1 2026, the quarter ended 2026-03-31, revenue was $1.5B, net income $335.7M, and diluted EPS $1.23. FairStock calls it a STALWART with steady five-year growth. But at the $322.17 close on 2026-10-26, the P/E is 63.92, P/B 12.94, EV/EBITDA 38.88, and PEG 0.49. The Graham Number is $53.14, a -495.58% margin of safety, so Graham would demand far more evidence and a much lower price. FairStock's 51/100 score and 1.9% FCF yield reinforce that the business is better than the price.

In plain English: Cadence makes software and hardware tools that help engineers design computer chips. The business looks strong: it is profitable, generates cash, and carries modest debt. But at $322.17 a share, the price looks expensive compared with the company's profits and accounting value.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-26 close · note generated 2026-10-28 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · fiscal Q1 2025 10-Q (period ended 2025-03-31) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer