CDNS · sample dossier
Cadence Design Systems
50/100
FreshGenerated Oct 24, 2026 · 10:00 AM UTC · 1 hour ago
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EquityCadence Design Systems · XNAS
Decision context
Recommendation
A mixed picture — no strong reason to buy or sell right now.
AlphaDog Fair Value
Market context
Snapshot returns at report publication
1 month
-1.7%
3 months
-6.5%
6 months
-4.9%
1 year
-4.2%
At a Glance
A large company is in a pullback at premium pricing.
Top Holders
As of Jun 30, 2026Financial trajectory
Financial Performance
Executive thesis & key metrics
Executive Thesis
Cadence Design Systems (CDNS) is an $87.16B market cap electronic design automation provider trading at $316.49 with an 85.9% TTM gross margin and 23.6% TTM net margin.
Key Metrics to Watch
What changed recently
No material changes found in the last 30 days.
Why this rating
Score 50 · Hold
Data through
FreshJun 30, 2026
Growth scores 84/100 — top-line expansion leads the profile.
Re-evaluate if
- Net margin falls below 18.9% (was 23.6%)
Trim / reconsider if
- ROA falls below 6.9% (was 10.6%)
- TTM Debt/Equity increases above 0.39 or TTM FCF/share falls below $6.05.
Think of these dollars as a map of our value estimate for Hold — helpful context, not a reason to override the view.
A Calmer Look · Devil's Advocate
The consensus Hold verdict (composite score 50/100) treats Cadence's operational metrics and its 64.3x P/E valuation as a stable equilibrium, ignoring that the fundamental anchor relies on stale June 2026 financial data (over 90 days old as of 2026-10-24).
May be overlooked
Severe operating expense leakage
Neither side investigates the 62.3 percentage point spread between the 85.9% gross margin and 23.6% net margin, which likely masks heavy R&D and stock-based compensation required to defend market share.
Flawed peer group construction
The bear case anchors its 0th-percentile valuation critique (64.3x P/E, 40.9x EV/EBITDA) against non-EDA businesses like WTS (31.3x P/E), META (21.9x P/E), and ANET (58.6x P/E) rather than direct silicon design software competitors.
Truncated regulatory visibility
The synthesis relies on an 89-day-old SEC filing (2026-07-27) and stale filings from May, April, and February 2026 (>90 days old) where the 10-K excerpt is truncated to the table of contents, leaving customer concentration, export control risks, and contingent liabilities completely unexamined.
Expectations look stretched
Unsustainable operating leverage extrapolation
The bull case highlights 125.4% YoY EPS growth on 24.2% YoY revenue growth as recurring operating leverage, ignoring base effects and the fact that sequential Q2 EPS growth already slowed to +8.1% QoQ on stale June 2026 numbers.
Complacent FCF yield acceptance
Bulls cite $6.05 TTM FCF/share as a pillar of strength, but at a $316.49 share price ($87.16B market cap), this equates to a meager 1.91% FCF yield to support a 12.7x Price/Book multiple.
Piotroski score mediocrity
Bulls group a 6/9 Piotroski F-score with a 13.35 Altman Z-score as proof of elite financial health, overlooking that 6/9 is merely average and signals that three fundamental momentum or efficiency sub-metrics failed to improve.
YoY revenue growth slows below 24.2% while TTM P/E remains at or above 64.33.
YoY revenue growth slows below 24.2% while TTM P/E remains at or above 64.33.
Monitor These Triggers
3 Checkpoints · Next PrintYoY Revenue Growth relative to the baseline of 24.2% (alongside YoY EPS growth relative to 125.4%).
Go deeper
For learning and research only — not investment advice. AlphaDog doesn’t hold stocks and isn’t your financial advisor.
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