Cadence Design Systems, Inc. (CDNS) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Cadence Design Systems, Inc.

Updated on October 27, 2026 · accounts published on October 26, 2026

Reading of October 26, 2026: A highly profitable business with record margins and more cash than debt

Cadence Design Systems trades at a P/E of 64.0, double its sector's 32.0 median but in line with its own ten-year median of 64.8.

• Is Cadence Design Systems expensive or cheap? Its P/E of 64.0 is double the sector median of 32.0, yet almost exactly at its own ten-year median of 64.8.
• How is the business doing? Revenue grew 14 % over the last 12 months, and the fiscal 2025 operating margin of 31 % was a 12-year high.
• How strong is the balance sheet? Debt/equity is 0.27 and net cash reached $1.49 per share in fiscal 2025, with an Altman Z-score of 13.3.
• What to expect from the next earnings? Analysts expect EPS of $2.03 for the report due February 16, 2027; 26 of 31 analysts rate the stock a buy.
• Does it grow with real cash or by diluting shareholders? Free cash flow was 30 % of revenue in fiscal 2025, while stock-based pay took 8.6 %, under the 10 % healthy limit.

Is Cadence Design Systems expensive or cheap?

Over the last 12 months Cadence Design Systems trades at a P/E of 64.0. That is 100 % above the 32.0 median of 314 sector peers but only 1 % below its own ten-year median of 64.8. Across the decade the multiple ranged from 28.4 to 100.7, and it has been cheaper than today 47 % of the time. EV/EBITDA of 40.3× sits below its five-year average of 47.0×. The market has always charged a steep premium for this company, so today's price looks ordinary against its own history and steep against the sector. The shares are 23 % below their 52-week high and down 7 % over 12 months.

How is the business doing?

Revenue rose 14.1 % over the last 12 months, while EPS grew a slower 5.5 %, so earnings per share lagged sales. Profitability is the strong point. The operating margin of 31.1 % in fiscal 2025 was the highest of the last 12 fiscal years, well above the 2014-2025 average of 22.6 %, and the trailing figure stands at 28.9 %. ROIC of 13.0 % over the last 12 months beats the 8.1 % sector median by 4.8 points and has stayed above 10 % in each of the last ten fiscal years. A net margin of 22.5 % and ROE of 19.6 % point to steady, high-quality returns.

How strong is the balance sheet?

Cadence Design Systems carries little leverage: debt/equity of 0.27 over the last 12 months and net debt to EBITDA of −0.3× in fiscal 2025, meaning cash exceeds debt. That net cash of $1.49 per share ($11.06 of cash against $9.57 of debt) equals only 0.5 % of the share price, so it does little to cushion the valuation. The Altman Z-score of 13.3 sits deep in the safe zone, and the Piotroski score of 6 out of 9 is solid without being perfect. A current ratio of 1.36 covers short-term obligations comfortably.

What to expect from the next earnings?

Cadence Design Systems has beaten EPS estimates in each of the last 8 quarters. On October 26, 2026 it reported $2.11 per share against $2.05 expected, a 2.9 % beat. For the next report, due February 16, 2027, analysts expect EPS of $2.03, below the latest quarter. The 2026 EPS consensus barely moved over the last 30 days, from $8.14 to $8.15 across 11 analysts, and revenue estimates are equally stable. Of 31 analysts, 26 say buy, 4 hold and 1 sell. With a P/E of 64.0, the bar is high: another small beat is already part of the expectation.

Does it grow with real cash or by diluting shareholders?

In technology, paying staff in shares can flatter reported earnings, so growth, pricing power and dilution say more than generic ratios. Cadence Design Systems clears most bars. Its gross margin of 86.4 % in fiscal 2025 beats the 70 % healthy mark for software, free cash flow reached 30 % of revenue against a 20 % threshold, and its Rule of 40 score of 44 is in elite territory. Stock-based pay at 8.6 % of revenue stays under the 10 % healthy limit. The weak spots: revenue per share grew 14.1 % a year over fiscal 2022-2025, just short of the 15 % mark, and ROIC of 13.0 % misses the sector's 15 % bar.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.