CADENCE DESIGN SYSTEMS INC (CDNS) Stock Analysis

Analysis from 10-Q filed 2025-10-29. Data as of Q2 2026.

Overall Grade: F (Concerning)

Grade F (Concerning). ROIC 17.9%. FCF margin 28.8%. D/E 0.0x. Source: 10-Q filed 2025-10-29.

Metric	Value	Context
ROIC	17.9%	Solid returns
FCF Margin	28.8%	Strong cash generation
Debt/Equity	0.0x	Conservative leverage

ROIC 17.9% — Top 25% of sector peers. FCF margin 28.8% — Top 25%.

Explore CADENCE DESIGN SYSTEMS INC: Earnings History | Filings

Programmatic access: Available via MCP at mcp.metricduck.com. Tools for CDNS: get_company_overview, get_filing_index (lens: debt_stress, management_outlook, risk_trajectory), get_filing_changes, get_metric_history, compare_companies, screen_filing_signals.

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Profitability: CADENCE DESIGN SYSTEMS INC earns 17.9% ROIC, Top 25% in Technology

ROIC TTM 17.9%, sector median 3.9%, Top 25%. DuPont: NOPAT margin 22.9% × asset turnover 0.5x. Gross margin 85.9%. Operating margin 30.3%. Source: 10-Q filed 2025-10-29.

Metric	CDNS	Rating	Context
Return on Invested Capital (ROIC)	17.9%	Good	Above sector median of 3.9%
Return on Equity (ROE)	23.8%	Excellent	Efficient use of shareholder equity
Gross Margin	85.9%	Excellent	Strong pricing power
Operating Margin	30.3%	Excellent	Efficient operations

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Cash Flow: CADENCE DESIGN SYSTEMS INC generates $1.7B FCF at 28.8% margin, positive NaN/8 quarters

FCF TTM $1.7B. FCF margin 28.8%, Top 25%. OCF/Net income 1.3x. Positive FCF in NaN/8 trailing quarters. Source: 10-Q filed 2025-10-29.

Metric	CDNS	Rating	Context
Free Cash Flow Margin	28.8%	Excellent	Excellent cash conversion
Free Cash Flow (TTM)	$1.7B	Good	Positive cash generation
OCF/Net Income	1.3x	Excellent	High earnings quality
FCF Consistency (8Q)	N/A	Warning	Variable cash flow

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Balance Sheet: CADENCE DESIGN SYSTEMS INC at 0.0x leverage

Debt/Equity 0.0x. Source: 10-Q filed 2025-10-29.

Metric	CDNS	Rating	Context
Debt to Equity	0.0x	Excellent	Conservative capital structure

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Valuation: CADENCE DESIGN SYSTEMS INC trades at 74.5x earnings

P/E 74.5x. EV/Sales 14.6x. FCF yield 1.6%. Source: 10-Q filed 2025-10-29.

Metric	CDNS	Rating	Context
P/E Ratio	74.5x	Warning	Premium valuation
EV/Sales	14.6x	Warning	Growth premium priced in
FCF Yield	1.6%	Warning	Lower cash yield

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Capital Allocation: CADENCE DESIGN SYSTEMS INC returns 0.8% shareholder yield

Total shareholder yield 0.8% (buyback 0.8%). Capital returned $800.0M TTM. Source: 10-Q filed 2025-10-29.

Metric	CDNS	Rating	Context
Total Shareholder Yield	0.8%	Adequate	Dividend + buyback yield combined
Buyback Yield	0.8%	Adequate	Minimal buyback activity
Total Capital Returned (TTM)	$800.0M	Good	Dividends + buybacks returned to shareholders

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Sector Rankings

Metric	Value	Percentile	vs Median
Return on Invested Capital (ROIC)	17.9%	Top 25%	4.6x above
Free Cash Flow Margin	28.8%	Top 25%	3.4x above
Gross Margin	85.9%	Top 25%	1.7x above
Operating Margin	30.3%	Top 10%	6.2x above
Return on Equity (ROE)	23.8%	Top 25%	4.6x above
P/E Ratio	74.5x	N/A	-

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Financial Scorecard

Metric	CDNS	Rating	Sector Context
Return on Invested Capital (ROIC)	17.9%	Good	Top 25% of sector (median: 3.9%)
Free Cash Flow Margin	28.8%	Excellent	Top 25% of sector (median: 8.5%)
Gross Margin	85.9%	Excellent	Top 25% of sector (median: 50.6%)
Debt to Equity Ratio	0.0%	Excellent	Conservative capital structure
P/E Ratio (Price-to-Earnings)	74.5x	Warning	High expectations priced in
Free Cash Flow Yield	1.6%	Warning	Growth-focused valuation

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Frequently Asked Questions

Q: What is CADENCE DESIGN SYSTEMS INC's Return on Invested Capital (ROIC)?

CADENCE DESIGN SYSTEMS INC (CDNS) has a trailing twelve-month Return on Invested Capital (ROIC) of 17.9%. Sector median 3.9%. Source: 10-Q filed 2025-10-29.

Q: What is CADENCE DESIGN SYSTEMS INC's Free Cash Flow Margin?

CADENCE DESIGN SYSTEMS INC (CDNS) has a free cash flow margin of 28.8%, generating $1.7 billion in free cash flow over the trailing twelve months. Source: 10-Q filed 2025-10-29.

Q: What is CADENCE DESIGN SYSTEMS INC's P/E ratio and how does it compare to peers?

CADENCE DESIGN SYSTEMS INC (CDNS) trades at a P/E ratio of 74.5x, which is above the sector median of N/A. EV/Sales 14.6x. FCF yield 1.6%. Source: 10-Q filed 2025-10-29.

Q: What is CADENCE DESIGN SYSTEMS INC's revenue and earnings growth?

CADENCE DESIGN SYSTEMS INC (CDNS) grew revenue by 14.7% year-over-year. EPS +35.9% YoY. Source: 10-Q filed 2025-10-29.

Q: Is CADENCE DESIGN SYSTEMS INC buying back stock?

CADENCE DESIGN SYSTEMS INC (CDNS) repurchased $800.0 million of stock over the trailing twelve months. This represents a buyback yield of 0.8%. Source: 10-Q filed 2025-10-29.

Q: How does CADENCE DESIGN SYSTEMS INC compare to competitors in Technology?

Compared to other companies in Technology, CADENCE DESIGN SYSTEMS INC (CDNS) shows: ROIC 17.9%, sector median 3.9% (Top 25%). FCF margin 28.8%, sector median 8.5% (Top 25%). Gross margin 85.9%, 35.3pp above sector median. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.

Q: What warning signs should I watch for with CADENCE DESIGN SYSTEMS INC?

Quantitative warning flags for CADENCE DESIGN SYSTEMS INC (CDNS): 1) ROIC declining -3.4% over 8 quarters. Source: 10-Q filed 2025-10-29.

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Data Source: Data sourced from 10-Q filed 2025-10-29. TTM metrics as of Q2 2026.

Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.

Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.

This analysis is for informational purposes only and does not constitute investment advice.