MODEL VERDICT
Cadence Design Systems, Inc. (CDNS) — Relative Valuation
Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Popular:
Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Composite score derived from valuation, quality, and risk factors
Quantitative model thresholds · For educational and research purposes only
Each row records the model's monthly assessment. High Conviction = the model detected notable undervaluation vs peers. Neutral = no notable divergence was found. The return column shows the actual price change over 90 days for reference. This is a quantitative observation log — not investment advice.
| Date | Assessment | Score | Price | Status | 90d Fwd Return |
|---|---|---|---|---|---|
| Feb 28, 2026 | NEUTRAL | 0.23 | $301.40 | CURRENT | — |
| Feb 21, 2026 | NEUTRAL | 0.23 | $296.28 | CURRENT | — |
| Feb 14, 2026 | NEUTRAL | 0.22 | $299.46 | CURRENT | — |
| Feb 11, 2026 | NEUTRAL | 0.22 | $299.00 | CURRENT | — |
| Jan 11, 2026 | NEUTRAL | 0.23 | $327.31 | Below threshold | -11.1% |
Historical model observations for research purposes only. Past quantitative patterns do not predict future results. Not a recommendation to buy, sell, or hold any security.
| Methodology | Fair Value | vs Current | Weight | Quality | Status |
|---|---|---|---|---|---|
| Forward P/E 113 analyst estimates | $164.03 | -45.6% | 20% | A- | Analyst Est. |
| EV/EBITDA 80 industry peers | $131.92 | -56.2% | 20% | A- | Peer Data |
| Industry Median P/E 71 industry peers | $105.42 | -65.0% | 15% | A | Peer Data |
| Price / Free Cash Flow 105 industry peers | $113.38 | -62.4% | 15% | B+ | Peer Data |
| EV/EBIT 77 industry peers | $152.68 | -49.3% | 8% | B+ | Peer Data |
| EV/FCF 107 industry peers | $106.97 | -64.5% | 7% | B | Model Driven |
| Peg Ratio 32 industry peers | $89.96 | -70.2% | 5% | B | Data |
| EV To Revenue 124 industry peers | $68.50 | -77.3% | 4% | B | Data |
| Price / Sales 125 industry peers | $64.09 | -78.7% | 3% | B | Model Driven |
| Earnings Yield 75 industry peers | $111.52 | -63.0% | 2% | B | Data |
| FCF Yield 107 industry peers | $113.52 | -62.3% | 1% | B | Data |
| Weighted Output Blended model output | $173.94 | -42.3% | 100% | 85 | SIGNIFICANTLY OVERVALUED |
| EPS Growth ↓ | P/E Multiple → | 62× | 68× | 74× (Current) | 80× | 86× |
|---|---|---|---|---|---|
| Bear Case (6%) | $266 | $292 | $317 | $343 | $369 |
| Conservative (9%) | $275 | $301 | $328 | $354 | $381 |
| Base Case (14.0%) | $287 | $315 | $343 | $370 | $398 |
| Bull Case (19%) | $299 | $328 | $357 | $386 | $415 |
Cross-sectional regression predicting expected multiples based on growth, margins, ROIC, and beta.
| Multiple | Avg | Median | Min | Max | Std |
|---|---|---|---|---|---|
| P/E Ratio | 62.45 | 71.30 | 19.65 | 78.04 | 20.92 |
| EV/EBIT | 52.35 | 55.86 | 38.53 | 65.36 | 9.46 |
| EV/EBITDA | 46.14 | 47.36 | 31.21 | 56.42 | 9.31 |
| P/FCF | 50.51 | 50.25 | 29.70 | 73.59 | 14.09 |
| P/FFO | 52.72 | 62.59 | 17.50 | 65.79 | 17.32 |
| P/TBV | 36.66 | 42.57 | 15.34 | 48.50 | 12.61 |
| P/AFFO | 58.83 | 68.40 | 18.76 | 74.26 | 19.34 |
| P/B Ratio | 16.38 | 16.09 | 9.25 | 21.82 | 3.88 |
| P/S Ratio | 14.91 | 16.13 | 8.33 | 18.16 | 3.56 |
Based on our peer multiples analysis with 28 valuation metrics, the model estimates CDNS's fair value at $173.94 vs the current price of $301.40, implying -42.3% downside potential. Model verdict: Significantly Overvalued. Confidence: 85/100. This is a quantitative estimate, not a recommendation.
The blended fair value of $173.94 is calculated using four lenses: industry median multiples (40%), historical multiples (30%), forward estimates (20%), and quality-adjusted multiples (10%). Monte Carlo simulation (10,000 iterations) gives a range of $149.73 (P10) to $199.31 (P90), with a median of $174.56.
CDNS's current P/E of 74.2x compares to the industry median of 26.0x (71 peers in the group). This represents a +185.9% premium to the industry. The historical average P/E is 62.5x over 7 years. Signal: High Premium.
30 analysts cover CDNS with a consensus rating of Buy. The consensus price target is $377.88 (range: $275.00 — $418.00), implying +25.4% upside from the current price. Grade breakdown: Strong Buy (0), Buy (25), Hold (4), Sell (1), Strong Sell (0).
The model confidence score is 85/100, based on: data completeness (30), peer quality (25), historical depth (20), earnings stability (8), and model agreement (2). Cyclicality penalty: -0 points. The model shows strong agreement across inputs.
The model flags several key risks: (1) Multiple compression: CDNS trades at the 8450th percentile of its historical P/E range. A reversion to median (62.5×) would imply significant downside. (2) Macro/regulatory risks are not captured in this model but remain material.
Peak earnings risk refers to the possibility that CDNS's current profitability is above its sustainable long-term trend. The model detects a margin Z-score of -0.7σ, meaning margins are 0.7 standard deviations below their historical average. If margins revert to the 7-year mean (25.8%), the model estimates fair value drops by 370.0% to approximately $313. This isn't a prediction — it's a scenario analysis.
No. This dashboard is a quantitative research tool for educational and informational purposes only. It is not investment advice, a solicitation, or a recommendation to buy, sell, or hold any security. The operator of this platform is not a registered investment advisor (RIA), broker-dealer, or financial planner. All model outputs, fair value estimates, signals, and scenarios are the result of automated quantitative computations and should not be construed as professional financial guidance. You should consult a qualified, licensed financial advisor before making any investment decisions. Past model performance is not indicative of future results.