Comprehensive Stock Comparison
Compare Cadence Design Systems, Inc. (CDNS) vs Shopify Inc. (SHOP) Stock
Analyze side-by-side fundamentals, valuation, growth, and profitability to decide which stock is the better buy.
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Quick Verdict
| Category | Winner | Why |
|---|---|---|
| Growth | SHOP | 30.1% revenue growth vs CDNS's 14.1% |
| Value | CDNS | Lower P/E (37.3x vs 65.9x) |
| Quality / Margins | CDNS | 20.9% net margin vs SHOP's 10.7% |
| Stability / Safety | CDNS | Beta 1.33 vs SHOP's 2.23 |
| Dividends | Tie | Neither pays a meaningful dividend |
| Momentum (1Y) | CDNS | +20.3% vs SHOP's +7.8% |
| Efficiency (ROA) | CDNS | 10.9% ROA vs SHOP's 8.1%, ROIC 25.9% vs 9.4% |
Who Each Stock Is For
Income & stability
Growth exposure
Long-term compounding (10Y)
Sleep-well-at-night portfolio
Valuation efficiency (growth/$)
Defensive / Recession hedge
Business Model
What each company does and how it makes money
Cadence Design Systems is a leading provider of electronic design automation (EDA) software and hardware used to design semiconductors and electronic systems. It generates revenue primarily through software licenses and maintenance (~70% of revenue) and hardware systems for chip verification (~30%), with its tools being essential for designing everything from smartphones to automotive chips. The company's moat comes from its deeply entrenched position in the semiconductor design workflow—its tools are industry standards that engineers must use to design complex chips, creating high switching costs and network effects.
Shopify is a comprehensive commerce platform that enables businesses of all sizes to create online stores, manage sales across multiple channels, and handle operations like payments, shipping, and inventory. It generates revenue primarily through subscription fees for its platform tiers — which account for about 30% of revenue — and merchant solutions like payment processing, shipping, and capital advances that make up the remaining 70%. The company's key advantage is its integrated ecosystem that combines easy-to-use store creation tools with a vast app marketplace and fulfillment network, creating high switching costs for merchants as they grow their businesses.
Revenue Breakdown by Segment
How each company's revenue is distributed across its business units
Financial Metrics Comparison
Side-by-side fundamentals across 2 stocks. BestLagging
Financial Scorecard
CDNS leads in 4 of 6 categories — strongest in Financial Metrics and Valuation Metrics. 1 category is tied.
Financial Metrics (TTM)
SHOP is the larger business by revenue, generating $11.6B annually — 2.2x CDNS's $5.3B. CDNS is the more profitable business, keeping 20.9% of every revenue dollar as net income compared to SHOP's 10.7%. On growth, SHOP holds the edge at +30.6% YoY revenue growth, suggesting stronger near-term business momentum.
| Metric | CDNSCadence Design Sy… | SHOPShopify Inc. |
|---|---|---|
| RevenueTrailing 12 months | $5.3B | $11.6B |
| EBITDAEarnings before interest/tax | $1.7B | $1.5B |
| Net IncomeAfter-tax profit | $1.1B | $1.2B |
| Free Cash FlowCash after capex | $1.6B | $2.0B |
| Gross MarginGross profit ÷ Revenue | +96.2% | +48.1% |
| Operating MarginEBIT ÷ Revenue | +28.2% | +12.7% |
| Net MarginNet income ÷ Revenue | +20.9% | +10.7% |
| FCF MarginFCF ÷ Revenue | +30.0% | +17.4% |
| Rev. Growth (YoY)Latest quarter vs prior year | +6.2% | +30.6% |
| EPS Growth (YoY)Latest quarter vs prior year | +14.5% | -42.0% |
Valuation Metrics
At 74.2x trailing earnings, CDNS trades at a 42% valuation discount to SHOP's 128.4x P/E. Adjusting for growth (PEG ratio), SHOP offers better value at 4.38x vs CDNS's 5.31x — a lower PEG means you pay less per unit of expected earnings growth.
| Metric | CDNSCadence Design Sy… | SHOPShopify Inc. |
|---|---|---|
| Market CapShares × price | $81.9B | $157.4B |
| Enterprise ValueMkt cap + debt − cash | $81.4B | $156.1B |
| Trailing P/EPrice ÷ TTM EPS | 74.24x | 128.44x |
| Forward P/EPrice ÷ next-FY EPS est. | 37.33x | 65.90x |
| PEG RatioP/E ÷ EPS growth rate | 5.31x | 4.38x |
| EV / EBITDAEnterprise value multiple | 43.35x | 104.11x |
| Price / SalesMarket cap ÷ Revenue | 15.47x | 13.62x |
| Price / BookPrice ÷ Book value/share | 15.05x | 11.69x |
| Price / FCFMarket cap ÷ FCF | 51.62x | 78.44x |
Profitability & Efficiency
CDNS delivers a 20.3% return on equity — every $100 of shareholder capital generates $20 in annual profit, vs $9 for SHOP. SHOP carries lower financial leverage with a 0.01x debt-to-equity ratio, signaling a more conservative balance sheet compared to CDNS's 0.45x.
| Metric | CDNSCadence Design Sy… | SHOPShopify Inc. |
|---|---|---|
| ROE (TTM)Return on equity | +20.3% | +9.1% |
| ROA (TTM)Return on assets | +10.9% | +8.1% |
| ROICReturn on invested capital | +25.9% | +9.4% |
| ROCEReturn on capital employed | +20.5% | +11.0% |
| Piotroski ScoreFundamental quality 0–9 | 6 | 6 |
| Debt / EquityFinancial leverage | 0.45x | 0.01x |
| Net DebtTotal debt minus cash | -$521M | -$1.4B |
| Cash & Equiv.Liquid assets | $3.0B | $1.5B |
| Total DebtShort + long-term debt | $2.5B | $188M |
| Interest CoverageEBIT ÷ Interest expense | 13.57x | — |
Total Returns (with DRIP)
A $10,000 investment in CDNS five years ago would be worth $20,442 today (with dividends reinvested), compared to $9,216 for SHOP. Over the past 12 months, CDNS leads with a +20.3% total return vs SHOP's +7.8%. The 3-year compound annual growth rate (CAGR) favors SHOP at 43.2% vs CDNS's 16.0% — a key indicator of consistent wealth creation.
| Metric | CDNSCadence Design Sy… | SHOPShopify Inc. |
|---|---|---|
| YTD ReturnYear-to-date | -2.9% | -23.2% |
| 1-Year ReturnPast 12 months | +20.3% | +7.8% |
| 3-Year ReturnCumulative with dividends | +56.2% | +193.5% |
| 5-Year ReturnCumulative with dividends | +104.4% | -7.8% |
| 10-Year ReturnCumulative with dividends | +1298.6% | +5294.6% |
| CAGR (3Y)Annualised 3-year return | +16.0% | +43.2% |
Risk & Volatility
CDNS is the less volatile stock with a 1.33 beta — it tends to amplify market swings less than SHOP's 2.23 beta. A beta below 1.0 means the stock typically moves less than the S&P 500. CDNS currently trades 80.1% from its 52-week high vs SHOP's 66.3% drawdown — a narrower gap to the peak suggests stronger recent price momentum.
| Metric | CDNSCadence Design Sy… | SHOPShopify Inc. |
|---|---|---|
| Beta (5Y)Sensitivity to S&P 500 | 1.33x | 2.23x |
| 52-Week HighHighest price in past year | $376.45 | $182.19 |
| 52-Week LowLowest price in past year | $221.56 | $69.84 |
| % of 52W HighCurrent price vs 52-week peak | +80.1% | +66.3% |
| RSI (14)Momentum oscillator 0–100 | 49.6 | 48.7 |
| Avg Volume (50D)Average daily shares traded | 1.9M | 10.0M |
Analyst Outlook
Wall Street rates CDNS as "Buy" and SHOP as "Buy". Consensus price targets imply 36.8% upside for SHOP (target: $165) vs 25.4% for CDNS (target: $378).
| Metric | CDNSCadence Design Sy… | SHOPShopify Inc. |
|---|---|---|
| Analyst RatingConsensus buy/hold/sell | Buy | Buy |
| Price TargetConsensus 12-month target | $377.88 | $165.16 |
| # AnalystsCovering analysts | 30 | 63 |
| Dividend YieldAnnual dividend ÷ price | — | — |
| Dividend StreakConsecutive years of raises | 0 | — |
| Dividend / ShareAnnual DPS | — | — |
| Buyback YieldShare repurchases ÷ mkt cap | +1.1% | 0.0% |
Historical Charts
Charts are rendered on first load. Hover for details.
Chart 1Total Return — 5 Years (Rebased to 100)
| Stock | Mar 20 | Feb 26 | Change |
|---|---|---|---|
| Cadence Design Syst… (CDNS) | 100 | 423.04 | +323.0% |
| Shopify Inc. (SHOP) | 100 | 270.68 | +170.7% |
Cadence Design Syst… (CDNS) returned +104% over 5 years vs Shopify Inc. (SHOP)'s -8%. A $10,000 investment in CDNS 5 years ago would be worth $20,442 today (including dividends reinvested).
Chart 2Revenue Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Cadence Design Syst… (CDNS) | $1.8B | $5.3B | +191.7% |
| Shopify Inc. (SHOP) | $389M | $11.6B | +2868.2% |
Cadence Design Systems, Inc.'s revenue grew from $1.8B (2016) to $5.3B (2025) — a 12.6% CAGR. Shopify Inc.'s revenue grew from $389M (2016) to $11.6B (2025) — a 45.8% CAGR.
Chart 3Net Margin Trend — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Cadence Design Syst… (CDNS) | 11.2% | 20.9% | +87.2% |
| Shopify Inc. (SHOP) | -9.1% | 10.7% | +217.3% |
Cadence Design Systems, Inc.'s net margin went from 11% (2016) to 21% (2025). Shopify Inc.'s net margin went from -9% (2016) to 11% (2025).
Chart 4P/E Ratio History — 9 Years
| Stock | 2017 | 2025 | Change |
|---|---|---|---|
| Cadence Design Syst… (CDNS) | 57.3 | 77 | +34.4% |
| Shopify Inc. (SHOP) | 435.4 | 171.2 | -60.7% |
Cadence Design Systems, Inc. has traded in a 20x–78x P/E range over 9 years; current trailing P/E is ~74x. Shopify Inc. has traded in a 61x–435x P/E range over 4 years; current trailing P/E is ~128x.
Chart 5EPS Growth — 10 Years
| Stock | 2016 | 2025 | Change |
|---|---|---|---|
| Cadence Design Syst… (CDNS) | 0.7 | 4.06 | +480.0% |
| Shopify Inc. (SHOP) | -0.04 | 0.94 | +2332.8% |
Cadence Design Systems, Inc.'s EPS grew from $0.70 (2016) to $4.06 (2025) — a 22% CAGR. Shopify Inc.'s EPS grew from $-0.04 (2016) to $0.94 (2025).
Chart 6Free Cash Flow — 5 Years
Cadence Design Systems, Inc. generated $2B FCF in 2025 (+53% vs 2021). Shopify Inc. generated $2B FCF in 2025 (+314% vs 2021).
CDNS vs SHOP: Frequently Asked Questions
9 questions · data-driven answers · updated daily
01Is CDNS or SHOP a better buy right now?
Cadence Design Systems, Inc. (CDNS) offers the better valuation at 74.2x trailing P/E (37.3x forward), making it the more compelling value choice. Analysts rate Cadence Design Systems, Inc. (CDNS) a "Buy" — based on 30 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.
02Which has the better valuation — CDNS or SHOP?
On trailing P/E, Cadence Design Systems, Inc. (CDNS) is the cheapest at 74.2x versus Shopify Inc. at 128.4x. On forward P/E, Cadence Design Systems, Inc. is actually cheaper at 37.3x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Shopify Inc. wins at 2.25x versus Cadence Design Systems, Inc.'s 2.67x.
03Which is the better long-term investment — CDNS or SHOP?
Over the past 5 years, Cadence Design Systems, Inc. (CDNS) delivered a total return of +104.4%, compared to -7.8% for Shopify Inc. (SHOP). A $10,000 investment in CDNS five years ago would be worth approximately $20K today (assuming dividends reinvested). Over 10 years, the gap is even starker: SHOP returned +52.9% versus CDNS's +1299%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.
04Which is safer — CDNS or SHOP?
By beta (market sensitivity over 5 years), Cadence Design Systems, Inc. (CDNS) is the lower-risk stock at 1.33β versus Shopify Inc.'s 2.23β — meaning SHOP is approximately 68% more volatile than CDNS relative to the S&P 500. On balance sheet safety, Shopify Inc. (SHOP) carries a lower debt/equity ratio of 1% versus 45% for Cadence Design Systems, Inc. — giving it more financial flexibility in a downturn.
05Which has better profit margins — CDNS or SHOP?
Cadence Design Systems, Inc. (CDNS) is the more profitable company, earning 20.9% net margin versus 10.7% for Shopify Inc. — meaning it keeps 20.9% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: CDNS leads at 31.1% versus 12.7% for SHOP. At the gross margin level — before operating expenses — CDNS leads at 85.6%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.
06Is CDNS or SHOP more undervalued right now?
The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential. By this metric, Shopify Inc. (SHOP) is the more undervalued stock at a PEG of 2.25x versus Cadence Design Systems, Inc.'s 2.67x. Both stocks trade at elevated growth-adjusted valuations, so expected growth needs to materialise. On forward earnings alone, Cadence Design Systems, Inc. (CDNS) trades at 37.3x forward P/E versus 65.9x for Shopify Inc. — 28.6x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for SHOP: 36.8% to $165.16.
07Which pays a better dividend — CDNS or SHOP?
None of the stocks in this comparison currently pay a material dividend. All are effectively zero-yield and should be held for capital appreciation rather than income.
08Is CDNS or SHOP better for a retirement portfolio?
For long-horizon retirement investors, Cadence Design Systems, Inc. (CDNS) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (+1299% 10Y return). Shopify Inc. (SHOP) carries a higher beta of 2.23 — meaning larger drawdowns in market downturns, which matters significantly when you cannot wait years for a recovery. Both have compounded well over 10 years (CDNS: +1299%, SHOP: +52.9%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.
09What are the main differences between CDNS and SHOP?
Both stocks operate in the Technology sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.
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