Head to Head Survey: Gigamon (GIMO) vs. Cadence Design Systems (CDNS)

Gigamon (NYSE: GIMO) and Cadence Design Systems (NASDAQ:CDNS) are both software – nec companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, institutional ownership and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Gigamon and Cadence Design Systems, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gigamon 0 9 1 0 2.10
Cadence Design Systems 0 4 2 0 2.33

Gigamon presently has a consensus price target of $40.94, indicating a potential upside of 6.35%. Cadence Design Systems has a consensus price target of $43.25, indicating a potential upside of 10.25%. Given Cadence Design Systems’ stronger consensus rating and higher probable upside, analysts clearly believe Cadence Design Systems is more favorable than Gigamon.

Valuation & Earnings

This table compares Gigamon and Cadence Design Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gigamon $310.86 million 4.62 $49.43 million ($0.04) -962.50
Cadence Design Systems $1.94 billion 5.70 $204.10 million $0.73 53.74

Cadence Design Systems has higher revenue and earnings than Gigamon. Gigamon is trading at a lower price-to-earnings ratio than Cadence Design Systems, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

97.9% of Gigamon shares are owned by institutional investors. Comparatively, 85.0% of Cadence Design Systems shares are owned by institutional investors. 4.5% of Gigamon shares are owned by insiders. Comparatively, 2.6% of Cadence Design Systems shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Gigamon 2.75% 2.98% 2.06%
Cadence Design Systems 10.50% 31.28% 12.92%

Summary

Cadence Design Systems beats Gigamon on 11 of the 13 factors compared between the two stocks.

Gigamon Company Profile

Gigamon Inc. offers a solution that delivers visibility and control of data-in-motion traversing enterprise, federal and service provider networks. The Company’s Visibility Platform consists of a distributed system of nodes (that in combination establish a Visibility Fabric). The Visibility Platform includes physical appliances and virtual nodes that can be deployed in data centers, central offices, virtualized/private cloud/public cloud environments, and small form-factor remote site appliances, which in combination enable pervasive visibility of network infrastructures. Its GigaSECURE Security Delivery Platform enables security teams and information technology (IT) personnel to gain visibility into their IT infrastructure by forwarding selected traffic of interest from network, server and remote location infrastructure to security, management, analysis and compliance tools in a manner that is optimized for specific uses or functions.

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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