Reviewing Varonis Systems (NASDAQ:VRNS) & Cadence Design Systems (NASDAQ:CDNS)

Cadence Design Systems (NASDAQ:CDNS) and Varonis Systems (NASDAQ:VRNS) are both computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

84.8% of Cadence Design Systems shares are held by institutional investors. Comparatively, 95.7% of Varonis Systems shares are held by institutional investors. 2.0% of Cadence Design Systems shares are held by company insiders. Comparatively, 2.6% of Varonis Systems shares are held by company 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 Cadence Design Systems and Varonis Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cadence Design Systems	22.74%	29.24%	16.05%
Varonis Systems	-17.38%	-20.35%	-6.85%

Risk and Volatility

Cadence Design Systems has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Varonis Systems has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Cadence Design Systems and Varonis Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cadence Design Systems	1	1	11	0	2.77
Varonis Systems	0	5	13	1	2.79

Cadence Design Systems presently has a consensus target price of $325.23, suggesting a potential upside of 14.26%. Varonis Systems has a consensus target price of $55.06, suggesting a potential upside of 14.94%. Given Varonis Systems’ stronger consensus rating and higher probable upside, analysts plainly believe Varonis Systems is more favorable than Cadence Design Systems.

Earnings and Valuation

This table compares Cadence Design Systems and Varonis Systems”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cadence Design Systems	$4.87 billion	15.94	$1.04 billion	$3.95	72.06
Varonis Systems	$573.35 million	9.35	-$95.76 million	($0.81)	-59.14

Cadence Design Systems has higher revenue and earnings than Varonis Systems. Varonis Systems 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.

Summary

Cadence Design Systems beats Varonis Systems on 9 of the 15 factors compared between the two stocks.

About Cadence Design Systems

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. The company also provides digital IC design and sign off products, including Genus synthesis and Joules RTL power solutions, as well as Modus DFT software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and multiple patterning preparation; and Innovus implementation system, a physical implementation system. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system design and analysis products to develop printed circuit boards and IC packages, as well as to analyze electromagnetic, electro-thermal, and other multi-physics effects. Further, the company provides intellectual property (IP) products comprising pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP with memory models to emulate and model the expected behavior and interaction of standard industry system interface protocols. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. The company serves consumer, hyperscale computing, 5G communications, mobile, automotive, aerospace and defense, industrial, and life science industries. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.

About Varonis Systems

Varonis Systems, Inc. provides software products and services that allow enterprises to manage, analyze, alert, and secure enterprise data in North America, Europe, the Middle East, Africa, and internationally. Its software enables enterprises to protect data stored on premises and in the cloud, including sensitive files and emails; confidential personal data belonging to customers, and patients and employees' data; financial records; source code, strategic and product plans; and other intellectual property. It offers DatAdvantage that captures, aggregates, normalizes, and analyzes every data access event for users on Windows and UNIX/Linux servers, storage devices, email systems, intranet servers, cloud applications, and data stores; and DatAlert that profiles users, devices, and their behaviors related to systems and data, detects and alerts on deviations that indicate compromise, and provides a web-based dashboard and investigative interface. It also provides data Classification engine that identifies and tags data based on criteria set in various metadata dimensions, as well as provides business and information technology (IT) personnel with actionable intelligence about data; and DataPrivilege. In addition, the company offers Data Transport Engine, an execution engine that unifies the manipulation of data and metadata, translating business decisions, and instructions into technical commands, such as data migration or archiving; and DatAnswers that provides search functionality for enterprise data. It serves its products to financial services, public, healthcare, industrial, technology, insurance, energy and utilities, consumer and retail, education and construction, and engineering sectors. The company sells its products through a network of distributors and resellers. Varonis Systems, Inc. was incorporated in 2004 and is headquartered in New York, New York.