Cadence Design Systems, Inc. (CDNS) Stock Analysis
Score BCompounder · Grade A · Bullish
$342.17
$243.73
-28.8%
10/10
A
Compounder
Investment Thesis
Price is above modeled value range. Quality supports holding but not attractive for new positions.
High-quality company trading above modeled fair value. Price above modeled entry range.
For New Investors
Price above modeled value range
For Current Holders
Quantitative score: neutral
Buy if
- Price drops 15-20% (improves asymmetry)
- Bull scenario catalysts materialize
- Market-wide correction creates opportunity
Sell if
- Bear scenario triggers occur
- Quality metrics deteriorate (ROIC declining)
- Better alternatives emerge
Valuation
Fair Value estimate: $243.73 (-28.8%). Overvalued vs fundamentals.
PEG-Based EPS
$381.77
FCF DCF Model
$214.80
EV/EBITDA
$156.87
Blended Fair Value
$243.73
Confidence
Medium
Methods
PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA
Quality Analysis
90/120 points
Investable
ROE (3Y Avg)
24.5%
ROIC-WACC Spread
3.8%
D/E Ratio
0.5x
Current Ratio
2.9x
Interest Coverage
14x
FCF Positive Years
3/3
Quality Flags
- ROIC spread: 3.8pp (got 10/25 pts)
- Leverage: D/E 0.5x (10/15 pts)
Market Sentiment
Wall Street Consensus
$380.00
+11.1% Upside
26 analysts
Range: $275.00 — $425.00
Rating: Strong Buy
Our model is more cautious than Wall Street.
Trend & Technical
Price ($342.42) is 6.1% above SMA 200 ($322.64). Bullish trend confirmed.
Tech Score 51/100 — Neutral technical picture. Mixed signals across indicators.
Risk & Reward
Asymmetry Ratio
2.26:1
Expected Return
+7.8%
Bull Upside
+24.8%
Bear Downside
-11.0%
Good asymmetry: 2.26:1 ratio. Upside justifies risk.
Verdict: Favorable
Scenario Analysis
Bear
Base
Bull
Buy Zone & Action Plan
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AI Executive Summary
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Technical Analysis
RSI, MACD, moving averages, trend signals, and momentum indicators.
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Frequently Asked Questions
What is the fair value of CDNS?
Based on our multi-method conviction analysis, the estimated fair value of Cadence Design Systems, Inc. (CDNS) is $243.73. This is calculated by blending PEG-Based EPS, FCF 2-Stage DCF, EV/EBITDA and applying a quality premium of 0% based on the company's fundamentals. The confidence level of this estimate is medium.
Is CDNS a buy, sell, or hold?
CDNS currently has a HOLD rating with a conviction score of 10/10. Price is above modeled value range. Quality supports holding but not attractive for new positions. Price above modeled value range.
Is CDNS a high-quality stock?
Cadence Design Systems, Inc. has a quality grade of A (90/120 points), rated as Investable. Key metrics include ROE of 24.5%, ROIC-WACC spread of 3.8%, and D/E ratio of 0.5x.
What type of stock is CDNS?
CDNS is classified as a "compounder" in our framework. High P/E: 79.8x, Low dividend (reinvesting): 0.0%, Moderate growth: 14.1%, Strong ROE: 21.1%, Market-like beta: 1.13
What do Wall Street analysts say about CDNS?
26 Wall Street analysts have a consensus price target of $380.00 for CDNS, representing +11.1% upside. Targets range from $275.00 to $425.00. The consensus recommendation is "Strong Buy". Our model is more cautious than Wall Street.
What are the risks of investing in CDNS?
The risk/reward asymmetry ratio for CDNS is 2.26:1, rated as Favorable. Good asymmetry: 2.26:1 ratio. Upside justifies risk. The expected return is +7.8%, with bull case upside of +24.8% and bear case downside of -11.0%.
What is the current trend for CDNS?
CDNS is in a bullish trend. Price ($342.42) is 6.1% above SMA 200 ($322.64). Bullish trend confirmed. The technical score is 51/100.
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Last updated: May 19, 2026 · Framework version 3.7
This analysis is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.