CDNS
Cadence Design Systems
Recurring SaaS
★ Quality 87/100Price today
$344.99
what the market pays
Worth
$174.48
calculated cycle value
Price is 98% above its value
charlieapp.co
A monopoly position
This company has a competitive advantage so strong that its rivals find it practically impossible to replicate.
Price vs Intrinsic Value
The line is the price month by month; the green band marks when it's undervalued (−20% off value). When the price drops in there, the discount is real, not opinion.
Where does the value come from?
Software and subscriptions
$163.50
per share
How it's calculated
Cadence Design Systems — high assistant confidence (2026-06-07). Review note.
Net cash in the bank
cash minus financial debt, per share
Total calculated value
business + cash
How many times the cash flow
Recurring SaaS · vs 26 peers
You pay 57.5x times this business's cash flow; its sector median is 20.3x.
51% above what Charlie thinks it's worth (28.2x) — you're overpaying, sector or no sector.
Why Overvalued?
Its free cash flow is $5.81/share × 28.2x multiplier plus $10.98 in net cash = $174.48 in intrinsic value. Today's price of $344.99 is 49% above the calculated value — the market is paying a premium over what the model sees as fair.
The price is 98% above the calculated value. You're paying more than it's worth.
Buying here lowers your expected return and wipes out the safety margin.
The next reasonable entry zone starts at $165.76.
At what price would buying make sense?
Entry zones
🟢 Undervalued
≤$139.58
-20% off Value
🟡 Discounted
≤$165.76
-5% off Value
🔴 Today
$344.99
-49% Valor
Overvalued
The market prices it too high versus what the business makes. Patience pays off here.
“Time is the friend of the wonderful company, the enemy of the mediocre.”
— Warren Buffett
Model updated · July 2026
The business
Without Cadence, designing a chip is like building a skyscraper without blueprints.
Cadence sells the software (EDA) used to design and verify chips before they're manufactured. It charges for recurring multi-year licenses, so ~80% of its revenue is contracted in advance. In 2025 it billed $5.3B with $1.6B in FCF.
Designing a modern chip without Cadence or Synopsys is like building a skyscraper without blueprints. Engineers train on their tools for years, and switching risks million-dollar delays in tape-out. The duopoly with Synopsys controls the critical flow, and the cost of getting it wrong means nobody switches just to save money.
Revenue history
From $3.0B to $5.3B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $5.3B · FY2025
Of every $100 in sales, $79 goes to costs and operations; $21 is left as net profit (21% margin).
Catalysts and risks
AI chip design boom: hyperscaler clients designing their own silicon raise demand for EDA and prices per seat.
Growth in the hardware/IP and emulation segment, which already contributes hundreds of millions and is climbing double digits.
Contracted backlog over $6B that provides revenue visibility for 2026.
Demanding multiple: at 28x FCF, the market already prices in years of perfect growth.
Geographic concentration in China under the risk of U.S. export controls.
Dependence on the semiconductor investment cycle; if designers cut R&D budgets, renewals cool off.
Charlie's note
“A beautiful business: a mandatory toll to make chips, no debt and cash to spare. The problem isn't the quality, it's the price they're asking for it. At 19% growth the story adds up; the day it drops to 10%, the multiple hurts.”
Analysis · June 2026
So when would be a good price for Cadence Design Systems?
By our calculation, not yet. We will email you the day it drops to $165.76 — so you do not have to keep checking.
🔔 Email meFree · no card
Charlie informs, it doesn't advise. No information should be taken as a recommendation to buy or sell.