Cadence Design Systems (NASDAQ: CDNS) is one of 118 public companies in the “Software” industry, but how does it compare to its peers? We will compare Cadence Design Systems to related companies based on the strength of its institutional ownership, dividends, profitability, risk, earnings, analyst recommendations and valuation.

Institutional and Insider Ownership

84.3% of Cadence Design Systems shares are held by institutional investors. Comparatively, 58.4% of shares of all “Software” companies are held by institutional investors. 2.6% of Cadence Design Systems shares are held by insiders. Comparatively, 20.0% of shares of all “Software” companies are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Cadence Design Systems and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cadence Design Systems 1 1 3 0 2.40
Cadence Design Systems Competitors 262 1998 4255 84 2.63

Cadence Design Systems presently has a consensus target price of $34.00, indicating a potential downside of 18.70%. As a group, “Software” companies have a potential upside of 4.58%. Given Cadence Design Systems’ peers stronger consensus rating and higher probable upside, analysts plainly believe Cadence Design Systems has less favorable growth aspects than its peers.

Profitability

This table compares Cadence Design Systems and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cadence Design Systems 12.86% 27.81% 11.00%
Cadence Design Systems Competitors -43.44% -25.23% -9.94%

Valuation and Earnings

This table compares Cadence Design Systems and its peers revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Cadence Design Systems $1.87 billion $421.11 million 48.07
Cadence Design Systems Competitors $1.49 billion $438.76 million 40.78

Cadence Design Systems has higher revenue, but lower earnings than its peers. Cadence Design Systems is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Volatility and Risk

Cadence Design Systems has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, Cadence Design Systems’ peers have a beta of 0.98, indicating that their average share price is 2% less volatile than the S&P 500.

Summary

Cadence Design Systems peers beat Cadence Design Systems on 7 of the 13 factors compared.

Cadence Design Systems Company Profile

Cadence Design Systems, Inc. provides solutions that enable its customers to design electronic products. The Company’s product categories include Functional Verification, Digital integrated circuits (IC) Design and Signoff, Custom IC Design and Verification, System Interconnect and Analysis, and intellectual property (IP). Functional verification products are used to verify that the circuitry or the software designed will perform as intended. Digital IC design offerings are used to create representations of a digital circuit or an IC that can be verified for correctness prior to implementation. Custom IC design and verification offerings are used to create schematic and physical representations of circuits down to the transistor level for analog and memory designs. System Interconnect and Analysis offerings are used to develop printed circuit boards and IC packages. Design IP offerings consist of functional blocks, which customers integrate into their ICs for the development process.

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