CluenexCadence Design Systems CDNS
Cadence Design Systems scores excellent on business quality (7.8 of 10). Here is why, in plain words, and what our sealed record shows.
Why it matters
- What Cadence Design Systems does
Cadence Design Systems sells complex software, verification tools, and IP to semiconductor and electronics companies designing advanced chips. Engineers rely on these platforms to build and test processors before physical manufacturing.
- What it does best
Cadence dominates electronic design automation with a gross margin of 85.9%, outperforming peer SNPS at 72.4%. This edge stems from deep IP integration and multi-decade semiconductor workflow embedding that makes customer switching nearly impossible.
- The main risk
Valuation leaves zero room for error with a price of $351.35 sitting far above an intrinsic value of $264.55. Any growth deceleration in chip design spending risks triggering a severe multiple contraction.
Quality, check by check
Scored against its own industry, from company filings.
Operating margins sit at 31.2% backed by a top-decile gross margin of 85.9% and a free cash flow margin in the 76th sector percentile. The business scales efficiently, driving expanding profits as revenue grows.
High switching costs lock in enterprise chip developers, protected by a gross margin sitting in the top decile of its sector at the 95th percentile. Rivals cannot easily replicate decades of custom PDK integration.
Revenue grew 14.1% to $5.8B, continuing a steady multi-year expansion from $2.7B in 2021. Growth sits in the middle of the pack at the 57th sector percentile, matching a stable upward historical trend.
Solid cash reserves with $3.2B in cash outpacing total debt of $2.5B, yielding an interest coverage of 14.6x that easily absorbs obligations. Free cash flow reached $1.7B, supporting a healthy balance sheet getting stronger.
Insiders
Executives and directors, from SEC Form 4 filings we read ourselves. Open market trades only; grants, option exercises and pre-planned sales left out.
No open market buys or unplanned sales by executives or directors.
Our sealed record on CDNS
Verdicts appear here 30 days after we publish them; members see today's. Each one is in the nightly ledger, fingerprinted the night it was made.
The first sealed verdicts appear here on Oct 11, 2026.
Questions
Cadence Design Systems scores excellent on the Cluenex quality check (7.8 of 10), measured against its own industry. Profitability is strong, moat strong, growth fast and financial health strong.
In the last 90 days of SEC Form 4 filings: No open market buys or unplanned sales by executives or directors.
Oct 26, 2026.
See CDNS today
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- Fair value with cautious, base and optimistic cases
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Cite this page: Cluenex, “Cadence Design Systems (CDNS)”, https://cluenex.com/stocks/cdns/, data as of Oct 10, 2026.