Cadence Design Systems, Inc. CDNS
Cadence Design Systems remains a best-in-class EDA franchise with accelerating top-line momentum — Q2 2026 revenue grew 24.2% YoY to $1.58B and management raised its 2026 outlook on agentic AI-driven design complexity — but the stock trades at 67.0x P/E and 16.0x P/S, premiums of 72% and 135% over peer medians respectively, leaving little room for error. Persistent insider net selling of $171M over 24 months and a slightly negative smart money score of -0.0156 as of Q2 2026 temper conviction despite the fundamental strength.
The stock has recovered to $338.78 from the prior hold call at $324.82, now sitting between its 50-day ($347.47) and 200-day ($327.33) moving averages with neutral RSI of 52.8, suggesting the market is fairly pricing the growth-vs-valuation tension.
What could go wrong
- Valuation compression. At 66.95x P/E and 43.22x EV/EBITDA — 72% and 71% above peer medians — any deceleration in revenue growth or margin pressure could trigger a sharp de-rating, especially with a DCF intrinsic value estimate of $250 versus the current $338.78 price.
- Persistent insider selling. Over 24 months, insiders net sold $171.1M in shares across 211 dispositions versus 51 acquisitions, with selling continuing into late August 2026 at prices near $339.
- Net income growth lagging revenue. FY2025 net income grew only 5.1% YoY while revenue grew 14.1%, and net margin compressed to 20.9% from 22.7% in FY2024, partly reflecting elevated total debt of $2.48B versus $764M in FY2023.
- Smart money turning cautious. The smart money score declined from 0.0469 in Q1 2026 to -0.0156 in Q2 2026, with fund count rising to 66 but net positioning turning slightly negative.
What would change my mind
Where this comes from: quarterly_results, period ended 2026-06-30 · peer_relative composite · peer_relative composite · insider summary, 24-month window. Orin's read on CDNS; not advice.
Twelve months actual closes to 2026-09-23 · actual filings
50-day average 200-day average · volume below
On file
All CDNS filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| Vanguard Capital Management | $6.8B | 0.1% of fund |
| State Street | $4.9B | 0.1% of fund |
| Fmr | $3.6B | 0.2% of fund |
| Invesco | $3.4B | 0.3% of fund |
| Jpmorgan Chase & | $2.9B | 0.2% of fund |
| Geode Capital Management | $2.7B | 0.1% of fund |
110 filers · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 278 Form 4 filings, net −$175.5M. Of the 50 on hand, 0 were open-market purchases and 26 sales— the rest are grants, option exercises and tax withholding.
Ask Orin about CDNS
Orin answers questions about CDNS from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →Where it trades
| Metric | Now | Own median | Sector |
|---|---|---|---|
| P/E | 61.1× | 73.2× | 53.3× |
| EV/EBITDA | 39.5× | 48.9× | — |
| P/S | 14.58× | 17.06× | — |
| P/B | 12.3× | 17.4× | — |
Its P/E sits 20th percentile of its own last 5 years (−0.91σ from its own mean).
21.2%
free-cash-flow growth every year for 10 years, discounted at 10%, is what today’s price implies — starting from $1.6B of trailing free cash flow. It is an assumption the market is making, not a forecast Orin is making.
What Wall Street published
$402
$300 – $450 · +30% against today's price
- 26 buy or overweight
- 4 hold
- 1 underweight or sell
The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.
Against the companies it is compared to
| Company | Market cap | P/E | EV/EBITDA | Gross | Net | ROE |
|---|---|---|---|---|---|---|
| CDNSCadence Design Systems, Inc. | $85B | 61.1× | 39.5× | 88.5% | 23.6% | 23% |
| ADSKAutodesk, Inc. | $46B | 28.0× | 19.7× | 91.2% | 21.1% | 53% |
| DELLDell Technologies Inc. | $365B | 31.4× | 21.1× | 19.8% | 7.5% | -575% |
| GLWCorning Incorporated | $133B | 69.9× | 35.9× | 36.3% | 11.2% | 16% |
| MSIMotorola Solutions, Inc. | $76B | 35.9× | 22.4× | 50.0% | 17.4% | 86% |
| SNPSSynopsys, Inc. | $79B | 71.7× | 24.4× | 72.4% | 11.4% | 4% |
| WDAYWorkday, Inc. | $50B | 38.9× | 32.1× | 75.8% | 12.3% | 17% |
The median is of the 6 peers listed above and nothing else — check it against the column. This company trades 63.5% above it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.
What it has traded at
What its sector has traded at
Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.
Discounted cash flow
| Model | Fair value | Against | Computed |
|---|---|---|---|
| Standard DCF | $150 | $384.92 · −61% | 2026-06-10 |
| Levered DCF | $147 | $384.92 · −62% | 2026-06-10 |
The vendor’s intrinsic-value models. Treat them as a low-growth anchor — for a fast grower the market routinely pays well above a DCF. These were computed against the price in the “against” column, not today’s.
Every estimate on one scale
The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.