Synopsys, Inc. (SNPS) Fair Value & PE Analysis
Software - Infrastructure · NASDAQ
Current Price
$373.69
PE Ratio (TTM)
84.5x
Intrinsic Value
$279.81
-33.6% margin of safety
What Is Synopsys, Inc.'s Fair Value?
As of 2026-07-29, applying a 50.0x earnings multiple to Synopsys, Inc.'s (SNPS) earnings per share of $4.06 yields a fair value estimate of $279.81 per share, versus a market price of $373.69.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $243 to $320.89. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · SNPS intrinsic value (DCF view)
Is Synopsys, Inc. (SNPS) Overvalued?
At $373.69, SNPS trades above its PE-based fair value estimate, meaning the market pays a premium over the applied earnings multiple. By this model the stock looks expensive unless earnings grow into the price.
COMPETITIVE MOAT
↑Dominant EDA Market Position
Synopsys holds a commanding share in Electronic Design Automation (EDA) software. This entrenched position creates high switching costs for chip designers who rely on its complex tools.
↑Deep Customer Integration
Its tools are deeply integrated into the workflows of leading semiconductor companies. This tight integration makes it difficult and costly for customers to switch to alternative solutions.
↑AI Design Tool Leadership
Synopsys is strategically pivoting to higher-margin AI design offerings. This focus positions it to capture significant value in the rapidly growing AI chip market.
INVESTMENT RISKS
↓Intense Semiconductor Competition
The semiconductor industry is highly competitive, with major players constantly innovating. Synopsys faces pressure from rivals like Cadence Design Systems and Siemens EDA.
↓Cyclical Nature of Semiconductor Market
The semiconductor industry is subject to cyclical demand fluctuations. Downturns in chip demand can impact Synopsys' revenue and profitability.
↓Dependence on Key Customers
While integrated, Synopsys relies on a relatively small number of large semiconductor companies for a significant portion of its revenue. Loss of a major customer could be impactful.
Base case
SNPS base case PE valuation
Intrinsic Value
$279.81
Margin of safety
-33.6%
Expected annual return
-5.6%
Base case assumptions: 15.3% annual earnings growth, 50x target PE, 10% discount rate, 5 year projection. Data as of 2026-07-29.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the SNPS PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Synopsys, Inc. respond.
Open PE Calculator for SNPSCompany Overview
Synopsys, Inc. is a leading provider of electronic design automation (EDA) software, instrumental in the creation and validation of integrated circuits. The company offers a robust portfolio of platforms, including the Fusion Design Platform for digital implementation, and the comprehensive Verification Continuum Platform. The latter provides a suite of solutions such as virtual prototyping, static and formal verification, simulation, emulation, and FPGA-based prototyping with integrated debugging tools. Synopsys also develops FPGA design products, which enable programming for specific functions. A significant part of its business involves intellectual property (IP) solutions. This encompasses IP for widely adopted communication standards like USB, PCI Express, DDR, Ethernet, SATA, MIPI, HDMI, and Bluetooth Low Energy. They also furnish analog IP, including data converters and audio codecs, alongside system-on-chip (SoC) infrastructure IP, specialized datapath and building block IP, and verification IP products. Furthermore, their offerings include mathematical and floating-point components, as well as Arm AMBA interconnect fabric and peripherals. Beyond core IP, Synopsys supplies logic libraries, embedded memories, and configurable processor cores, complemented by application-specific instruction-set processor tools for embedded applications. They also develop IP subsystems for audio, sensor, and data fusion functionalities, in addition to specialized security IP solutions. For advanced system design and analysis, Synopsys provides Platform Architect solutions for SoC architecture optimization, along with general virtual prototyping tools and HAPS FPGA-based prototyping systems. Their expertise extends to tools designed for optical systems and photonic devices. In addition to software and IP, the company delivers a range of services, including security testing, managed services, professional programs, and training. These services are designed to help customers identify and resolve security vulnerabilities and defects across the software development lifecycle. Manufacturing solutions are also part of their extensive offerings. Synopsys serves a diverse global client base, with applications across electronics, financial services, automotive, medicine, energy, and various industrial sectors. The company was founded in 1986 and is headquartered in Mountain View, California.
Financial Metrics — SNPS PE Stock Valuation Data
PE Ratio (TTM)
84.5x
PEG Ratio
n/m
Earnings Yield
1.09%
ROE (TTM)
2.6%
Revenue/Share (TTM)
$45.56
Debt/Equity
0.36x
Frequently Asked Questions
What is the PE ratio of SNPS?
The trailing twelve-month PE ratio of SNPS reflects how much investors pay per dollar of Synopsys, Inc.'s earnings. This metric is most useful when compared to Software - Infrastructure peers and the company's own historical range.
Is SNPS overvalued based on PE ratio?
SNPS's PE of 84.5x combined with a PEG ratio of -1.23 provides a growth-adjusted perspective. SNPS has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Software - Infrastructure, a DCF analysis may be more appropriate.
How do I value SNPS stock using PE ratio?
To value Synopsys, Inc. using PE: (1) Compare the current PE (84.5x) against the Software - Infrastructure median to assess relative pricing, (2) check the PEG ratio (-1.23) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of SNPS?
SNPS's PEG ratio is -1.23, calculated by dividing the PE ratio (84.5x) by the expected earnings growth rate. Because SNPS has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for SNPS stock valuation?
PE ratio gives a quick relative read — how SNPS is priced versus Software - Infrastructure peers. DCF provides an absolute value based on projected free cash flows. For the most reliable valuation, use PE as a quick comparability screen and DCF for a deeper fundamental analysis. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See SNPS DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value SNPS with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-07-29. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.