Upside case
Bull case
$604+70.1%
CDNS would need investors to value it at roughly 76x earnings — about 31x more generous than today's 45x forward P/E. That requires meaningful multiple expansion on top of continued earnings growth.
Analysis OverviewBuyUpdated May 1, 2026
Cadence Design Systems, Inc. (CDNS) Stock Analysis
Wall Street verdict, consensus price target, and analyst rating breakdown — everything needed to frame the risk/reward at today's price.
Analyst consensus
Buy
Covering
31
analysts
26 bullish · 1 bearish · 31 covering CDNS
Strong Buy
0
Buy
26
Hold
4
Sell
1
Strong Sell
0
Consensus Target
$371
+4.5% vs today
Scenario Range
$210 – $604
Model bear to bull value window
Coverage
31
Published analyst ratings
Valuation Context
44.7x
Forward P/E · Market cap $98.0B
CDNS price targets
Three scenarios for where CDNS stock could go
Current
~$355
Confidence
79 / 100
Updated
May 1, 2026
Where we are now
Current · $355
Bear
$210
Base
$536
Bull
$604
Market caseClosest to today
Base case
$536+51.0%
At 68x on FY1 earnings, the base case reflects a reasonable but not stretched valuation. It prices in continued growth without assuming an exceptional setup.
Stress case
Bear case
$210-40.9%
If investor confidence fades or macro conditions deteriorate, a 18x multiple contraction could push CDNS down roughly 41% from where it trades now.
Not financial advice. Model confidence reflects internal scenario assumptions, not a guarantee of returns. Past performance does not predict future results.
Cadence Design Systems, Inc.
CDNS · NASDAQTechnologySoftware - ApplicationDecember year-end
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.
Market Cap
$98.0B
Revenue TTM
$5.3B
Net Income TTM
$1.1B
Net Margin
20.9%
CDNS Revenue and Earnings Performance
Quarterly beat-or-miss track record against analyst estimates, plus forward revenue and EPS outlook for the next two fiscal years.
EPS Beat Rate
100%Exceptional
12 quarters tracked
Revenue Beat Rate
100%Exceptional
vs consensus estimates
Avg EPS Surprise
+5.0%
above Street consensus
Beat / Miss Record
BeatMissLeft = EPS · Right = Revenue
Q3 2025
Q4 2025
Q1 2026
Q2 2026
Last 4 Quarters
EPS beats: 4 of 4Q3 2025
EPS
$1.65/$1.56
Revenue
$1.3B/$1.2B
Q4 2025
EPS
$1.93/$1.79
Revenue
$1.3B/$1.3B
Q1 2026
EPS
$1.99/$1.91
Revenue
$1.4B/$1.4B
Q2 2026
EPS
$1.96/$1.91
Revenue
$1.5B/$1.5B
| Quarter | EPS (Actual / Est) | EPS Surprise | Revenue (Actual / Est) | Rev Surprise |
|---|---|---|---|---|
| Q3 2025 | $1.65/$1.56 | +5.8% | $1.3B/$1.2B | +2.0% |
| Q4 2025 | $1.93/$1.79 | +7.8% | $1.3B/$1.3B | +1.2% |
| Q1 2026 | $1.99/$1.91 | +4.2% | $1.4B/$1.4B | +1.1% |
| Q2 2026 | $1.96/$1.91 | +2.6% | $1.5B/$1.5B | +1.2% |
FY1–FY2 Estimates
Revenue Outlook
FY1
$6.1B
+15.0% YoY
FY2
$6.9B
+13.8% YoY
EPS Outlook
FY1
$5.49
+35.0% YoY
FY2
$6.13
+11.8% YoY
Trailing FCF (TTM)$1.6B
FCF Margin: 30.0%
Next Earnings
—
Expected EPS
—
Expected Revenue
—
CDNS beat EPS estimates in 4 of 4 tracked quarters. A perfect track record raises the bar for the upcoming report.
CDNS Revenue Breakdown by Segment
Product and geographic revenue mix from the latest annual disclosure, with year-over-year growth by segment.
Latest disclosure
FY 2025
Total disclosed revenue $5.3B
Product Mix
Latest annual revenue by segment or product family
Product and maintenance
91.0%
+14.4% YoY
Tap, hover, or focus a slice to inspect segment detail.
Geographic Mix
Latest annual revenue by reported region
Americas
26.2%
+10.1% YoY
Tap, hover, or focus a slice to inspect segment detail.
Product and maintenance is the largest disclosed segment at 91.0% of FY 2025 revenue, up 14.4% YoY.
Americas is the largest reported region at 26.2%, up 10.1% YoY.
CDNS Valuation Snapshot
Current multiples compared to the S&P 500, the company's sector, and its own five-year average.
Relative Value Signal
Overvalued
Fair value est. $241 — implies -29.4% from today's price.
Premium to Fair Value
29.4%
above fair value
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
CDNS
87.4x
vs
S&P 500
25.2x
+246% premium
vs Technology Trailing P/E
CDNS
87.4x
vs
Technology
27.5x
+218% premium
vs CDNS 5Y Avg P/E
Today
87.4x
vs
5Y Average
70.6x
+24% premium
Forward PE
44.7x
S&P 500
19.1x
+135%
Technology
21.7x
+106%
5Y Avg
—
—
Trailing PE
87.4x
S&P 500
25.2x
+246%
Technology
27.5x
+218%
5Y Avg
70.6x
+24%
PEG Ratio
6.25x
S&P 500
1.75x
+258%
Technology
1.47x
+326%
5Y Avg
—
—
EV/EBITDA
51.7x
S&P 500
15.3x
+239%
Technology
17.4x
+198%
5Y Avg
48.8x
+6%
Price/FCF
61.7x
S&P 500
21.3x
+189%
Technology
19.8x
+212%
5Y Avg
55.4x
+12%
Price/Sales
18.5x
S&P 500
3.1x
+491%
Technology
2.4x
+666%
5Y Avg
16.4x
+13%
Dividend Yield
—
S&P 500
1.88%
—
Technology
1.18%
—
5Y Avg
—
—
| Metric | CDNS | S&P 500 | Technology | 5Y Avg CDNS |
|---|---|---|---|---|
| Forward PE | 44.7x | 19.1x+135% | 21.7x+106% | — |
| Trailing PE | 87.4x | 25.2x+246% | 27.5x+218% | 70.6x+24% |
| PEG Ratio | 6.25x | 1.75x+258% | 1.47x+326% | — |
| EV/EBITDA | 51.7x | 15.3x+239% | 17.4x+198% | 48.8x |
| Price/FCF | 61.7x | 21.3x+189% | 19.8x+212% | 55.4x+12% |
| Price/Sales | 18.5x | 3.1x+491% | 2.4x+666% | 16.4x+13% |
| Dividend Yield | — | 1.88% | 1.18% | — |
CDNS trades above S&P 500 benchmarks on 6 of 6 measured multiples — commands a broad premium across most valuation dimensions.
Forward P/E and PEG reflect analyst consensus estimates. Historical averages use trailing ratios where forward data is unavailable.S&P 500 and sector benchmarks both use trailing median P/E — similar readings indicate the broader index and sector are priced alike.
Open valuation toolCDNS Financial Health
Verdict
Exceptional
CDNS generates $1.6B in free cash flow at a 30.0% margin — 25.9% ROIC signals a durable competitive advantage.
Cash Engine
Revenue, margins, and cash generation
Revenue (TTM)
Trailing-twelve-month sales base
$5.3B
Revenue Growth
TTM vs prior year
+14.1%
Gross Margin
Gross profit as a share of revenue
86.4%
Operating Margin
Operating income divided by revenue
31.1%
Net Margin
Net income divided by revenue
20.9%
EPS (TTM)
Diluted earnings per share, trailing twelve months
$4.06
Free Cash Flow (TTM)
Cash generation after capex
$1.6B
FCF Margin
FCF as share of revenue — the primary cash quality signal
30.0%
Capital Quality
ROIC, leverage, and debt serviceability
ROIC
Return on invested capital — primary competitive quality signal
25.9%
ROA
Return on assets, trailing twelve months
11.6%
Cash & Equivalents
Liquid assets on the balance sheet
$3.0B
Net Cash
Cash exceeds total debt — no net leverage
$521M
Debt Serviceability
Net debt as a multiple of annual free cash flow
Net cash ✓
ROE
Return on equity, trailing twelve months
21.7%
Shareholder Returns
How capital is returned to owners
Total shareholder yield
0.9%
Dividend
—
Buyback
0.9%
Share Repurchases
Trailing buyback outflow — dollar magnitude of capital returned
$925M
Dividend / Share
Annualized trailing dividend per share
—
Payout Ratio
Share of earnings distributed as dividends
—
Shares Outstanding
Declining as buybacks retire shares
276M
All figures from the trailing twelve months. ROIC uses invested capital (equity + net debt).
Open full ratios pageCDNS Stock Risk Factors
Key factors that could pressure the stock price, compress the multiple, or weigh on future results.
AI analysis · updated April 11, 2026
High Risk
Valuation Risk
Cadence’s stock trades at a high trailing P/E multiple, implying that much of the expected future growth is already priced in. If earnings growth slows or market multiples compress, the share price could experience a substantial correction. The limited upside margin leaves little room for error.
Medium
EPS Growth Deceleration
Recent quarterly reports show a noticeable slowdown in earnings per share growth, suggesting a potential softening of business momentum. If the trend continues, Cadence may struggle to sustain its revenue and margin expansion targets.
Medium
Technical Downtrend & Short Interest
The stock has been in a sustained downtrend, testing key support levels that could trigger further selling pressure. Rising short interest adds a near‑term headwind, amplifying downside risk until the trend reverses.
Medium
Competitive Pressure in AI
Intensifying rivalry, especially from Synopsys in the AI space, threatens Cadence’s market share and its ability to maintain revenue and earnings growth. Losing ground to competitors could erode pricing power and margin expansion.
Medium
China Export Control Risk
Cadence’s revenue exposure to China is roughly 15%, making it vulnerable to tighter export controls and geopolitical tensions. Any restrictions could reduce sales in that market and impact overall earnings.
These are risk mechanisms, not predictions. The key question is which would force a cut to earnings estimates or a lower multiple than the market currently prices in.
Why CDNS Stock Could Outperform
Structural drivers behind the upside case and why the stock could outperform over the next 12 months.
AI analysis · updated April 11, 2026
Robust Revenue Growth & Backlog
Cadence posted a 14.1% year‑over‑year revenue increase for full‑year 2025, driven by strong hardware and IP segments. The company’s backlog stands at $7.8 billion, representing roughly 67% of projected FY26 revenues, providing clear visibility for future cash flow.
AI Infrastructure Advantage
Cadence’s product suite is integral to AI chip and system development, highlighted by the launch of "ChipStack," an AI "Super Agent" for chip design. This positions Cadence as a key enabler of the accelerating AI megatrend.
Shareholder Value Creation
Cadence has a track record of returning value through share repurchases, which has supported EPS growth. The firm also demonstrates strong capital efficiency, with a high Return on Invested Capital and robust cash conversion ratio.
Analyst Consensus
A majority of Wall Street analysts maintain Buy or Strong Buy ratings on CDNS. The consensus view signals significant upside potential relative to the current market price.
Market Position & Execution
Operating in the critical electronic design automation space, Cadence benefits from financial durability and execution strength. These factors give it a competitive edge despite the presence of rivals.
A real bull case compounds — each driver matters most when it strengthens margins, supports capital returns, and keeps the company above the market's minimum growth bar simultaneously.
CDNS Stock Price Performance
52-week range context and price returns across multiple time horizons. Dividend contribution is shown separately in the Capital Return section.
Current Price
$354.90
52W Range Position
81%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$262.75
+35.1% from the low
52-Week High
$376.45
-5.7% from the high
1 Month
+27.03%
3 Month
+25.18%
YTD
+14.3%
1 Year
+16.1%
3Y CAGR
+20.0%
5Y CAGR
+22.8%
10Y CAGR
+31.3%
Range context matters because valuation compression and earnings misses rarely hit from the same starting point. A stock already far below its high can still fall, but it is no longer carrying the same embedded optimism as one pressing a fresh peak.
CDNS vs Peers
Valuation, growth, and margin comparison against the closest publicly traded peers for this company.
Peer Set
Accurate peer set
Forward PE
44.7x
vs 25.1x median
+78% above peer median
Revenue Growth
+15.0%
vs +17.7% median
-15% below peer median
Net Margin
20.9%
vs 20.0% median
+4% above peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
CDN CDNS Cadence Design Systems, Inc. | $98.0B | 44.7x | +15.0% | 20.9% | Buy | +4.5% |
SNP SNPS Synopsys, Inc. | $96.6B | 34.9x | +17.7% | 13.8% | Buy | +7.8% |
MTS MTSI MACOM Technology Solutions Holdings, Inc. | $23.2B | 69.2x | +19.8% | 15.9% | Buy | -18.0% |
PEG PEGA Pegasystems Inc. | $6.1B | 13.4x | +14.2% | 20.0% | Buy | +55.6% |
PTC PTC PTC Inc. | $16.3B | 17.8x | +7.9% | 41.6% | Buy | +42.4% |
NVD NVDA NVIDIA Corporation | $5.05T | 25.1x | +50.9% | 55.6% | Buy | +34.3% |
This peer comparison reflects companies with similar business models, product lines, or market positioning, supplemented by industry grouping when direct matches are limited.
CDNS Dividend and Capital Return
CDNS returns 0.9% annually — null% through dividends and 0.9% through buybacks.
Dividend UnknownFCF Unknown
Total Shareholder Yield
0.9%
Dividend + buyback return per year
Buyback Yield
0.9%
Dividend Yield
—
Payout Ratio
—
Dividend Profile
Yield, cadence, and growth quality
Dividend / Share
Trailing annualized cash dividend
$0.00
Growth Streak
Consecutive years of dividend increases
0Y
3Y Div CAGR
—
5Y Div CAGR
—
Ex-Dividend Date
—
Payment Cadence
—
0 payments over the last 12 months
Buyback Engine
How much per-share support comes from repurchases
Repurchases (TTM)
Cash used for buybacks in the latest trailing period
$925M
Estimated Shares Retired
3M
Approx. Share Reduction
0.9%
Shares Outstanding
Current diluted share count from the screening snapshot
276M
At 0.9%/year, buybacks mechanically lift EPS even with flat earnings — each remaining share represents a slightly larger piece of the company.
FAQ
7 questionsCDNS Investor Questions
Common questions answered from live analyst data and company financials.
01Is Cadence Design Systems, Inc. (CDNS) stock a buy or sell in 2026?
Cadence Design Systems, Inc. (CDNS) is rated Buy by Wall Street analysts as of 2026. Of 31 analysts covering the stock, 26 rate it Buy or Strong Buy, 4 rate it Hold, and 1 rate it Sell or Strong Sell. The consensus 12-month price target is $371, implying +4.5% from the current price of $355. The bear case scenario is $210 and the bull case is $604.
02What is the CDNS stock price target for 2026?
The Wall Street consensus price target for CDNS is $371 based on 31 analyst estimates. The high-end target is $425 (+19.8% from today), and the low-end target is $275 (-22.5%). The base case model target is $536.
03Is Cadence Design Systems, Inc. (CDNS) stock overvalued in 2026?
CDNS trades at 44.7x times forward earnings. The stock trades at a notable premium to the broad market, which is typical for businesses with strong free cash flow and above-average growth expectations. Based on current multiples versus the peer group, the relative model signals overvalued. Whether the stock is over or undervalued ultimately depends on whether consensus earnings estimates are achievable.
04What are the main risks for Cadence Design Systems, Inc. (CDNS) stock in 2026?
The primary risks for CDNS in 2026 are: (1) Valuation Risk — Cadence’s stock trades at a high trailing P/E multiple, implying that much of the expected future growth is already priced in. (2) EPS Growth Deceleration — Recent quarterly reports show a noticeable slowdown in earnings per share growth, suggesting a potential softening of business momentum. (3) Technical Downtrend & Short Interest — The stock has been in a sustained downtrend, testing key support levels that could trigger further selling pressure. Each factor has the potential to pressure earnings or compress the stock's valuation multiple.
05What is Cadence Design Systems, Inc.'s revenue and earnings forecast?
Analyst consensus estimates CDNS will report consensus revenue of $6.1B (+15.0% year-over-year) and EPS of $5.49 (+35.0% year-over-year) for the upcoming fiscal year. The following year, analysts project $6.9B in revenue.
06When does Cadence Design Systems, Inc. (CDNS) report its next earnings?
A confirmed upcoming earnings date for CDNS is not yet available. Check the Earnings section above for the most recent quarterly report dates and forward estimates.
07How much free cash flow does Cadence Design Systems, Inc. generate?
Cadence Design Systems, Inc. (CDNS) generated $1.6B in free cash flow over the trailing twelve months — a free cash flow margin of 30.0%. CDNS returns capital to shareholders through and share repurchases ($925M TTM).