Cadence Design Systems, Inc.
Orin's own judgment of how firmly the evidence points one way — not the chance the price goes up.
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 FY2025 FCF margin held at 30.0% on $1.59B of free cash flow — but the stock at $319.87 still trades at 63.2x P/E and 15.1x P/S, a 65.6% premium to peer median P/S despite a P/E discount to SNPS's 77.7x.
The pullback from prior levels has cooled RSI to 44.9 and pushed the price below the 200-day MA of $327.11, but persistent insider net selling of $111.8M over 24 months and a slightly negative smart money score of -0.01 as of Q2 2026 keep conviction muted. Accelerating growth and consistent earnings beats argue against selling, while rich multiples and weak technicals argue against buying here.
What could go wrong
- Valuation compression. At 63.2x P/E and 39.2x EV/EBITDA — a 57.2% premium to peer median EV/EBITDA of 24.9x — any growth deceleration could trigger multiple contraction.
- Persistent insider selling. 282 insider transactions over 24 months with zero open-market acquisitions and net dispositions of $111.8M, including CEO Devgan selling 3,779 shares on 17 Sep.
- Technical breakdown. Stock trades below its 200-day MA of $327.11 with a negative MACD histogram of -3.42, suggesting near-term downside momentum.
- Export restrictions and integration risk. Per recent news coverage, export restrictions and integration risks from acquisitions like Hexagon remain material headwinds to the growth thesis.
What would change my mind
Where this comes from: Q2 2026 results · FY25 fundamentals · peer comparison · technicals, 20 Oct. Orin's read on CDNS; not advice.
How has the share price moved?
Down 2.4% over twelve months, from $351.40 on 27 Oct 2025 to $343.08 at the Tue 27 Oct 2026 close. Its highest close in that time was $416.39 on 2 Jun 2026; the last close is 17.6% below it.
- Green line: the closing price each trading day.
- Grey line: the average closing price over the last 50 trading days.
- Dashed amber line: the same over the last 200 trading days — a slower, smoother line.
- Bars along the bottom: shares traded each day — green when it closed higher than the day before, rose when lower (the most, 7.1M, on 18 Jun 2026).
- Flags: the company's filings, on the day they were made (a 10-Q is the quarterly report and a 10-K the annual report; an 8-K reports a major event).
On file
All CDNS filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| BlackRock | $10.0B | 0.1% |
| Vanguard Capital Management | $6.8B | 0.1% |
| State Street | $4.9B | 0.1% |
| FMR | $3.6B | 0.2% |
| Invesco | $3.4B | 0.3% |
| JPMorgan Chase | $2.9B | 0.2% |
| Geode Capital Management | $2.7B | 0.1% |
| Vanguard Portfolio Management | $2.6B | 0.1% |
| Wellington Management Group | $1.8B | 0.3% |
| Goldman Sachs Group | $1.6B | 0.1% |
113 of the 815 filers we track · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 282 Form 4 filings; open-market trades net −$111.8M. Of the 50 on hand, 0 were open-market purchases and 25 sales — the rest are grants, option exercises and tax withholding.
Ask Orin about CDNS
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Start 3 free days →How is it priced, against its own past and its sector?
Priced at 67.8× its last 12 months of profit (Tue 27 Oct close) — higher than in 1 of its last 5 fiscal years (middle 73.4×); the typical Technology company on the NASDAQ is at 46.1×.
| Measure | Now | Its usual | Sector |
|---|---|---|---|
| P/E | 67.8×below usual | 73.4× | 46.1× |
| P/S | 15.4×below usual | 17.1× | — |
| EV/EBITDA | 40.5×below usual | 48.9× | — |
| P/B | 10.1×below usual | 17.4× | — |
- "Its usual" is the middle of its own last 5 fiscal years.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
P/S: the company's total market value divided by one year of revenue. Used when there is no profit to measure.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
P/B: the share price divided by the book value per share — what the company owns minus what it owes, as its accounts record it. When book value is tiny, P/B swings wildly and says little.
What do the analysts who cover it publish?
The analysts' average 12-month price target is $407 (from $300 to $450) — 19% above the Tue 27 Oct close price. That is their published opinion, not Orin's.
$407
$300 – $450 · +19% against the last close
- 12 buy or overweight
- 1 hold
- 1 underweight or sell
Price target: the share price an analyst publishes for about 12 months ahead. It is the opinion of the firm that wrote it; the average is across the firms that cover the company.
Overweight / underweight: analysts' rating words: overweight means the firm expects the stock to do better than the others it covers, underweight worse. Their words, not Orin's.
How is it priced next to the companies it is compared to?
Priced at 67.8× its last 12 months of profit. Only 1 of the 1 companies it is compared to made a profit (SNPS 82.4×), so there is no typical P/E.
| Company | Market value | P/E | EV/EBITDA | Gross margin | Net margin | ROE |
|---|---|---|---|---|---|---|
| CDNSCadence Design Systems, Inc. | $94B | 67.8× | 40.5× | 85.7% | 22.5% | 20% |
| SNPSSynopsys, Inc. | $91B | 82.4× | 26.3× | 72.4% | 11.4% | 4% |
- The list of companies is the data vendor's choice, so it can include a company a person would not have picked.
Market value: the share price times the number of shares — what the whole company is priced at.
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
EV/EBITDA: the price of the whole company (its shares plus its debt, minus its cash) divided by one year of operating profit before interest, tax and write-downs.
Gross margin: the share of each $1 of sales left after the direct cost of making what was sold.
Net margin: the share of each $1 of sales kept as profit after every cost. Below zero, the company lost money.
ROE: return on equity: one year of profit as a share of the shareholders' money in the business (its book value).
Is it priced high or low compared with its own past?
Priced at 67.8× its last 12 months of profit (Tue 27 Oct close). It has no full fiscal year on file since its history starts, so there is nothing of its own to compare with.
- Now67.8×
P/E: the share price divided by one year of profit per share — roughly how many years of today's profit the price pays for. A company that loses money has no P/E.
Fiscal year (FY): the company's own 12-month accounting year, which need not match the calendar year.
How has its sector been priced?
Technology companies on the NASDAQ were priced at a typical 46.1× their yearly profit (Tue 27 Oct close).
- Now46.1×
- Each year is the middle of that calendar year's daily sector P/E; "Now" is the Tue 27 Oct close figure, the same one in the table above.
Sector P/E: the middle P/E of the companies in the same sector on the same stock exchange, as the data vendor works it out each day.
What does a cash-flow model say a share is worth?
A standard cash-flow model puts it at $139 a share — 60% below the $346.88 price it was computed against (27 Oct).
| Model | Value a share | Against the price then |
|---|---|---|
| Standard | $139 | 60% below $346.88 |
| Levered | $135 | 61% below $346.88 |
Discounted cash flow: a model's estimate of what the company is worth today, from the cash it is forecast to make in future years. Small changes in the forecast move it a lot, and it says little about a company that loses money.
Standard / levered: two versions of the cash-flow model: the standard one counts the cash before the company pays its lenders, the levered one after.