Is Cadence Design Systems Inc. overvalued?

In our latest published analysis dated 2026-05-10, CDNS looks meaningfully overvalued. The price recorded at analysis is USD 363 versus a composite fair-value midpoint of USD 152 (range USD 110–USD 196), implying roughly 58.1% downside to the midpoint at that date.

What is CDNS's fair value?

Our latest published report, analyzed 2026-05-10, gives CDNS a composite fair-value range of USD 110–USD 196, with a midpoint of USD 152. The range is triangulated across multiple valuation models and weighted by reliability for Cadence Design Systems Inc.'s archetype; it is a dated research output, not a live price.

Should I buy CDNS now?

Our latest published rating for CDNS, analyzed 2026-05-10, is Sell with a confidence score of 88/100. Cadence Design Systems Inc. looks meaningfully overvalued at the analysis-date price of USD 363 versus a fair-value midpoint of USD 152. This is research for educational purposes, not personalized investment advice.

What are the biggest risks for CDNS?

The top risks our latest published report dated 2026-05-10 flags for Cadence Design Systems Inc. are: Severe Multiple Compression; Geopolitical Restrictions; Semiconductor Cyclicality.

What is CDNS's rating?

Our latest published rating for CDNS, analyzed 2026-05-10, is Sell, with a confidence score of 88/100 and a moat score of 9/10. It reflects the composite fair-value range (USD 110–USD 196) versus the price recorded at analysis (USD 363).

What archetype is CDNS?

In the latest published report analyzed 2026-05-10, Cadence Design Systems Inc. is classified as a mature compounder stock. Archetype determines how every downstream parameter — discount rate, terminal growth, deceleration curve, terminal multiple, scenario probability weights, scorecard weights, and which valuation models are prioritized — is calibrated for CDNS.

What is CDNS's free cash flow?

Free cash flow for Cadence Design Systems Inc. (CDNS) is computed as operating cash flow minus capital expenditure. We report both the absolute level and the FCF margin against revenue, with five years of trajectory.

Is CDNS burning cash?

Operating cash flow is the primary signal: when OCF is negative or significantly below net income, the cash-flow subsection flags the divergence and traces the cause to working-capital, deferred-revenue, or earnings-quality effects.

What does CDNS spend on capex?

Capital expenditure is reported as a percentage of revenue alongside the absolute number. Heavy investment phases are separated from harvesting phases so reinvestment intent is legible.

How does CDNS return cash to shareholders?

The financing activity row tracks dividends paid, share repurchases, and net debt issuance. Together with FCF, it answers whether buybacks and dividends are funded organically or by issuing debt.

CDNS cash flow: operating, investing, financing

Latest published researchAnalyzed 2026-05-10; report age: stale; sources: unverified. Age and source freshness are disclosed but do not remove the latest published report from discovery or indexing. Prices and valuation figures are the analysis-date snapshot, not a live quote.

Direct answer

Cadence Design Systems operates in a highly consolidated, sticky duopoly for EDA software. Increasing chip complexity ensures long-term secular demand, but current valuation is irrationally disconnected from fundamental realities. Fair value range: low $110, high $196, with mid-point at $152.

CASH FLOW FAQ

CDNS cash flow questions

Free cash flow for Cadence Design Systems Inc. (CDNS) is computed as operating cash flow minus capital expenditure. We report both the absolute level and the FCF margin against revenue, with five years of trajectory.

FAQ

CDNS — frequently asked questions

In our latest published analysis dated 2026-05-10, CDNS looks meaningfully overvalued. The price recorded at analysis is USD 363 versus a composite fair-value midpoint of USD 152 (range USD 110–USD 196), implying roughly 58.1% downside to the midpoint at that date.

Metric	Current	Trigger threshold
Revenue growth decelerating below 10%.	Monitor	Deterioration versus the report thesis
Operating margins contracting from 32% peak.	Monitor	Deterioration versus the report thesis
Major customer shifts to rival Synopsys.	Monitor

Line item	2021-12-31	2022-12-31	2023-12-31	2024-12-31	2025-12-31	Trend
Revenue	$2.99B	$3.56B+19.1%	$4.09B+14.9%	$4.64B+13.4%	$5.30B+14.2%	+15.4%
Gross profit	$2.68B	$3.19B	$3.65B	$3.99B	$4.57B	+14.3%
Operating income	$778.0M	$1.07B	$1.26B	$1.38B	$1.65B	+20.7%
Net income	$696.0M	$849.0M+22.0%	$1.04B+22.5%	$1.06B+1.9%	$1.11B+4.7%	+12.4%
EPS (diluted)	$2.50	$3.09	$3.82	$3.85	$4.06	+12.9%
EBITDA	$916.1M	$1.20B	$1.46B	$1.67B	$1.87B	+19.6%
R&D	$1.13B	$1.25B	$1.44B	$1.55B	$1.77B	+11.7%
SG&A	$749.3M	$846.3M	$932.7M	$1.03B	$1.12B	+10.5%

CDNS cash flow questions

CDNS — frequently asked questions

CDNS Cadence Design Systems Inc. fair value $110–$196

§1 Executive summary

Names readers of CDNS also follow

§2 Bear case

Severe Multiple Compression

Geopolitical Restrictions

Semiconductor Cyclicality

§3 Financial history

Income statement — last six periods

Quality scores

Numbers analysis

Read the full analysis — 11 more sections.