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Here's How Much You'd Have If You Invested $1000 in Cadence Design Systems a Decade Ago

Zacks Equity Research
·4 min read

How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.

The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.

What if you'd invested in Cadence Design Systems (CDNS) 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.

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Based in San Jose, CA, Cadence Design Systems Inc. (CDNS) 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 $2.988 billion in 2021.

The major product lines are as follows:

Functional verification products (24% of total 2021 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 (29%) 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 (23%) 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 (11%) offers Allegro system interconnect design platform, Sigrity analysis tools and OrCAD solution.

Under the IP segment (13%), 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 2021, the company derived 43.3% of revenues from United States, while the balance 56.7% came from its international operations.

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Cadence Design Systems ten years ago, you're probably feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in November 2012 would be worth $12,848.53, or a gain of 1,184.85%, as of November 11, 2022, and this return excludes dividends but includes price increases.

The S&P 500 rose 186.72% and the price of gold increased -2.59% over the same time frame in comparison.

Going forward, analysts are expecting more upside for CDNS.

Cadence’s Q3 performance benefited from strength across all segments owing to healthy demand for the company’s diversified product portfolio. Frequent product launches and synergies from recent collaborations and acquisitions are expected to help the company sustain top-line growth. The company’s Palladium and Protium platform is gaining traction among clients in the hyperscale, AI and high-end mobile customers. The company also expects the recent changes regarding US trade restriction to have minimal and manageable impact on the company’s business in 2022. Shares of the company have outperformed  industry in the year to date period. However, higher costs related to research and development are likely to dent margins in the near term. Stiff competition in simulation market and increasing supply chain constraints are concerns.

Over the past four weeks, shares have rallied 7.62%, and there have been 5 higher earnings estimate revisions in the past two months for fiscal 2022 compared to none lower. The consensus estimate has moved up as well.
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