Software - Application · NASDAQ
Current Price
$329.95
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Cadence Design Systems, Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. The company also provides digital IC design and sign off products, including Genus logic synthesis and Joules RTL power solutions, as well as Modus software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and multiple patterning preparation; and signoff products to signoff the design as ready for silicon manufacturing. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system design and analysis products to develop printed circuit boards and IC packages, as well as to analyze electromagnetic, electro-thermal, and other multi-physics effects. Further, the company provides intellectual property (IP) products comprising pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP and memory models to emulate and model the expected behavior and interaction of standard industry system interface protocols. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. The company serves 5G communications, aerospace and defense, automotive, industrial and healthcare, mobile, consumer, and hyperscale computing markets. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.
ROIC (TTM)
11.3%
ROE (TTM)
19.2%
FCF Yield
1.74%
Based on trailing twelve-month data, CDNS shows a free cash flow per share of N/A and a ROIC of 11.3%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 1.74% are important context metrics when evaluating CDNS's stock valuation relative to peers.
The intrinsic value of CDNS depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether CDNS is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $329.95. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Cadence Design Systems, Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Software - Application industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting CDNS's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Cadence Design Systems, Inc., this means projecting how much free cash flow the Software - Application will produce over the next 5-10 years, then discounting those amounts to today's dollars. CDNS's ROIC of 11.3% shows moderate capital returns.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For CDNS, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
