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If You Invested $1000 in Cadence Design Systems a Decade Ago, This is How Much It'd Be Worth Now
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For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Cadence Design Systems (CDNS - Free Report) ten years ago? It may not have been easy to hold on to CDNS for all that time, but if you did, how much would your investment be worth today?
Cadence Design Systems' Business In-Depth
With that in mind, let's take a look at Cadence Design Systems' main business drivers.
Based in San Jose, CA, Cadence Design Systems Inc. (CDNS - Free Report) offers products and tools that help customers to design electronic products. Through System Design Enablement (SDE) strategy the company offers software, hardware, services and reusable IC design blocks (IPs) to electronic systems and semiconductor customers.
Cadence’s core electronic design automation (EDA) software and services enable engineers to develop different types of ICs. Its design IP’s are directly integrated into the ICs.
System Connect tools and services are used for the design, analysis and verification of PCBs. Further, System Integration solutions aid in designing and analyzing systems as well as verifying system functionality.
Cadence reported revenues of $3.562 billion in 2022.
The major product lines are as follows:
Functional verification products (26% of total 2022 revenues) comprise four primary verification engines – JasperGold formal verification platform, Xcelium parallel simulation platform, Palladium Z1 enterprise emulation platform and Protium S1 FPGA-based prototyping platform.
Digital IC Design and Signoff (28%) offerings include Genus synthesis, Stratus high-level synthesis, Joules RTL power and Modus test solutions. Innovus implementation system is the company’s physical implementation offering. Tempus timing and Voltus power analysis, Quantus QRC extraction solutions, Physical Verification System and DFM are the signoff solutions.
Custom IC Design and Simulation (22%) includes the Virtuoso custom design platform. Virtuoso Advanced Node, Virtuoso Electrically Aware Design (EAD) and Spectre XPS FastSPICE Simulator are new products in the segment.
Systems Design & Analysis segment (12%) offers Allegro system interconnect design platform, Sigrity analysis tools and OrCAD solution.
Under the IP segment (12%), Cadence offers Tensilica DSPs, vertically targeted subsystems for audio/voice, baseband and vision/imaging applications, controllers and physical interfaces (PHYs) for standard protocols and analog IP.
In 2022, the company derived 44.3% of revenues from United States, while the balance 55.7% came from its international operations.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Cadence Design Systems, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in October 2013 would be worth $17,027.62, or a 1,602.76% gain, as of October 19, 2023. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 147.33% and gold's return of 41.95% over the same time frame.
Going forward, analysts are expecting more upside for CDNS.
Cadence’s performance is being driven by solid customer demand for its diversified product portfolio. Frequent product launches and strategic collaborations are expected to boost the top-line growth. Among existing products, Palladium and Protium platform is gaining traction among clients in the artificial intelligence (AI), hyperscale computing and automotive segments. Going ahead, the company is likely to gain from clients increasing their research and development (R&D) spending in AI driven automation Cadence has increased revenue guidance for 2023 to $4.05-$4.09 billion compared with the previous guidance of $4.03-$4.07 billion. We expect revenues for the current year to be $4.06 billion. However, higher R&D costs are likely to dent margins in the near term. Stiff competition and weak macroeconomic conditions are concerns.
The stock is up 5.28% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2023. The consensus estimate has moved up as well.
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If You Invested $1000 in Cadence Design Systems a Decade Ago, This is How Much It'd Be Worth Now
For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Cadence Design Systems (CDNS - Free Report) ten years ago? It may not have been easy to hold on to CDNS for all that time, but if you did, how much would your investment be worth today?
Cadence Design Systems' Business In-Depth
With that in mind, let's take a look at Cadence Design Systems' main business drivers.
Based in San Jose, CA, Cadence Design Systems Inc. (CDNS - Free Report) offers products and tools that help customers to design electronic products. Through System Design Enablement (SDE) strategy the company offers software, hardware, services and reusable IC design blocks (IPs) to electronic systems and semiconductor customers.
Cadence’s core electronic design automation (EDA) software and services enable engineers to develop different types of ICs. Its design IP’s are directly integrated into the ICs.
System Connect tools and services are used for the design, analysis and verification of PCBs. Further, System Integration solutions aid in designing and analyzing systems as well as verifying system functionality.
Cadence reported revenues of $3.562 billion in 2022.
The major product lines are as follows:
Functional verification products (26% of total 2022 revenues) comprise four primary verification engines – JasperGold formal verification platform, Xcelium parallel simulation platform, Palladium Z1 enterprise emulation platform and Protium S1 FPGA-based prototyping platform.
Digital IC Design and Signoff (28%) offerings include Genus synthesis, Stratus high-level synthesis, Joules RTL power and Modus test solutions. Innovus implementation system is the company’s physical implementation offering. Tempus timing and Voltus power analysis, Quantus QRC extraction solutions, Physical Verification System and DFM are the signoff solutions.
Custom IC Design and Simulation (22%) includes the Virtuoso custom design platform. Virtuoso Advanced Node, Virtuoso Electrically Aware Design (EAD) and Spectre XPS FastSPICE Simulator are new products in the segment.
Systems Design & Analysis segment (12%) offers Allegro system interconnect design platform, Sigrity analysis tools and OrCAD solution.
Under the IP segment (12%), Cadence offers Tensilica DSPs, vertically targeted subsystems for audio/voice, baseband and vision/imaging applications, controllers and physical interfaces (PHYs) for standard protocols and analog IP.
In 2022, the company derived 44.3% of revenues from United States, while the balance 55.7% came from its international operations.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Cadence Design Systems, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in October 2013 would be worth $17,027.62, or a 1,602.76% gain, as of October 19, 2023. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 147.33% and gold's return of 41.95% over the same time frame.
Going forward, analysts are expecting more upside for CDNS.
Cadence’s performance is being driven by solid customer demand for its diversified product portfolio. Frequent product launches and strategic collaborations are expected to boost the top-line growth. Among existing products, Palladium and Protium platform is gaining traction among clients in the artificial intelligence (AI), hyperscale computing and automotive segments. Going ahead, the company is likely to gain from clients increasing their research and development (R&D) spending in AI driven automation Cadence has increased revenue guidance for 2023 to $4.05-$4.09 billion compared with the previous guidance of $4.03-$4.07 billion. We expect revenues for the current year to be $4.06 billion. However, higher R&D costs are likely to dent margins in the near term. Stiff competition and weak macroeconomic conditions are concerns.
The stock is up 5.28% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 1 higher, for fiscal 2023. The consensus estimate has moved up as well.