Cadence Design Systems Inc. (NASDAQ:CDNS)

Price to Earnings (P/E) Ratio

The P/E ratio indicates fluctuating valuations with a generally upward trend over the analyzed periods. Initial values around 62.89 decreased slightly to 53.88 by early 2022, followed by a recovery and progressive increase, peaking at 99.91 by mid-2025. This pattern suggests growing investor expectations of future earnings or increased market optimism, notwithstanding some short-term volatility.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio displays a similar cyclical movement with a moderate increase over time. Starting near 57.54, the ratio declined and then rose to a high of 71.69 by mid-2025. The mid-period trough around 41.53 hints at improved operating profits relative to price, subsequently reversing as valuations became more stretched, which may reflect fluctuating operating efficiency or market valuation shifts.

Price to Sales (P/S) Ratio

The P/S ratio exhibits consistent growth with some variability. From a starting point of 13.85, it reached 20.02 at the end of 2023, indicating increased market value relative to sales. Despite some declines, the overall trend remains upward, ending at 19.87 by mid-2025. This trend suggests stronger sales growth or improved revenue recognition by the market over time.

Price to Book Value (P/BV) Ratio

The P/BV ratio shows notable fluctuations combined with a broad increase over the timeframe. Beginning at 10.07, the ratio ascended towards a peak around 24.05 late in 2023 but then underwent a gradual decline to approximately 15.15 before rising again to 20.19 by mid-2025. These changes indicate varying investor confidence in the company's net asset value, reflecting shifts in balance sheet strength or market perceptions of intrinsic value.

Share Price Trends

The share price exhibited an overall upward trend from March 2020 through June 2025. Starting at $77.84 in March 2020, the price increased significantly, reaching a peak of $300.74 by December 2023. This was followed by some fluctuations, with the price dipping to $258.34 in March 2025 before rising sharply again to $371.03 by June 2025. The price movements indicate periods of consolidation and volatility, but maintain an overall upward trajectory throughout the analyzed timeframe.

Earnings Per Share (EPS) Evolution

EPS data provided from December 2020 onward shows consistent growth over the quarters. Beginning at $2.12 in December 2020, EPS steadily increased to a peak of $3.96 in March 2025, before slightly declining to $3.71 in June 2025. This upward progression suggests improving profitability on a per-share basis, although the slight dip at the end may warrant observation for potential changes in earnings dynamics.

Price-to-Earnings (P/E) Ratio Dynamics

The P/E ratio was initially in the low 60s at 62.89 in December 2020 and generally remained within the 50 to 80 range throughout the periods measured. Notable fluctuations include spikes to 78.64 in December 2023 and a pronounced peak at 99.91 in June 2025. These increases in the P/E ratio, despite rising EPS, may reflect heightened investor expectations or increased share price valuation relative to earnings. The P/E ratio's variability indicates changing market sentiment and potential volatility in valuation.

Interrelation of Metrics

The increasing share price aligned with rising EPS suggests positive market reception to the company’s growing profitability. However, the P/E ratio's variability, including periods of substantial elevation, implies that share price increases occasionally outpaced earnings growth. The high P/E ratio observed in the latest period could indicate overvaluation or strong expected future growth. Careful analysis of market conditions and earnings sustainability is recommended to interpret these valuation levels.

The share price exhibited a general upward trend over the observed quarters, starting at $77.84 in March 2020 and reaching $371.03 by June 2025. Despite this growth, there were periods of volatility, including notable dips around December 2021 and June 2024, where the price declined from preceding highs. The most substantial increases appeared between late 2022 and early 2024, particularly from December 2022 ($185.70) to December 2023 ($300.74), reflecting strong market confidence during this interval.

Operating profit per share (OPPS) data were not available in the earliest quarters but began from December 2020 at $2.31 and showed a consistent upward trajectory through to June 2025 where it reached $5.18. This growth indicates improved operational efficiency or profitability over time, nearly doubling over the period analyzed, suggesting solid earnings performance.

The ratio of price to operating profit per share (P/OP) displayed fluctuations throughout the timeline. Initially recorded at 57.54 in December 2020, it decreased to its lowest point of 41.53 in December 2022, implying a potentially undervalued stock relative to its operating profit at that time or growing profitability not yet fully reflected in share price. Subsequently, the ratio increased again, peaking at 71.69 in June 2025, which may suggest that the market price outpaced earnings growth or that investors anticipated future profitability improvements.

Summary of trends:

Share Price:

Marked overall growth with intermittent volatility, accelerating notably from late 2022 to 2024.

Operating Profit per Share:

Steady and continuous increase, nearly doubling from inception to the last period.

Price to Operating Profit Ratio:

Fluctuated, with declines indicating periods of undervaluation or earnings outperforming price increases, followed by rises that may reflect market optimism or price gains exceeding earnings growth.

Overall, the financial data reveals a company experiencing robust growth in profitability, accompanied by a rising share price that reflects investor confidence despite occasional corrections. The P/OP ratio movements highlight varying market perceptions of value relative to operating profits over the observed periods.

Share Price Trends

The share price experienced notable growth from March 28, 2020, starting at $77.84, and generally rose over the examined periods, reaching a peak of $371.03 by June 30, 2025. There were periods of fluctuation, especially in late 2021 and early 2024, where the price saw some declines; for example, after reaching $167.37 in October 2021, it dropped to $135.21 by December 31, 2021. Similarly, the price decreased from $300.74 in December 2023 to $258.34 by March 31, 2025. However, the overall trajectory indicates strong long-term appreciation.

Sales per Share

The sales per share data is available beginning April 3, 2021, showing a steady incremental increase from $9.62 to $18.68 by June 30, 2025. This consistent growth signifies improving revenue-generating capabilities on a per-share basis. The increase is smooth without any evident declines, suggesting stable or improving operational performance throughout this period.

Price-to-Sales (P/S) Ratio

The P/S ratio exhibited fluctuations corresponding to changes in share price and sales performance. Initially, from April 3, 2021, it remained in the range of approximately 12.55 to 15.59 through 2021. Subsequently, the ratio rose to a high of around 20.02 in December 2023, indicating the market was valuing the company’s shares at a higher premium relative to its sales at that time. After this peak, the ratio declined to around 15.26 by March 31, 2025, though it remains elevated compared to earlier periods. These movements reflect market sentiment adjustments, possibly driven by expectations of future growth, profitability, or changing risk perceptions.

Overall Observations

The combination of increasing sales per share and rising share price over time indicates strengthening business fundamentals and positive investor outlook. Despite some volatility in share price and P/S ratios, the general pattern is one of growth. Notably, the increase in P/S ratio suggests that the market increasingly values each dollar of sales more highly, which could be attributed to factors such as improved margins, innovation, or market positioning. The steady rise in sales per share supports the view that revenue increases are genuine and sustainable rather than merely speculative price appreciation.

Share Price Trends

The share price demonstrated an overall upward trajectory from March 2020 to June 2025, beginning at $77.84 and advancing to $371.03. Notably, there were periods of volatility such as the decline from $167.37 in October 2021 to $135.21 in December 2021, and again from $300.74 in December 2023 to $258.34 in March 2025. Despite these fluctuations, the general long-term trend reflects significant appreciation in market valuation.

Book Value Per Share (BVPS) Trends

BVPS exhibited a steady increase throughout the observed period, rising from $7.73 in March 2020 to $18.37 in June 2025. The growth was gradual and consistent, with minor fluctuations such as a slight dip from $10.01 in April 2022 to $9.59 in July 2022. The continuous upward trend indicates an improvement in the company’s net asset value attributable to shareholders over time.

Price-to-Book (P/BV) Ratio Patterns

The P/BV ratio has shown variability, generally moving between approximately 10.07 and 24.05. The ratio peaked at 24.05 in December 2023, representing the highest valuation relative to book value during the period. Periods of decline include a notable drop from 17.63 in October 2021 to 13.68 in December 2021, mirroring the share price decrease. The ratio’s oscillations suggest changing market perceptions of the company’s value relative to its book equity, influenced by share price volatility and steady increases in book value.

Inter-Relationship Observations

The consistent rise in BVPS accompanied by a more volatile share price results in pronounced fluctuations in the P/BV ratio. This indicates that much of the market capitalization changes are driven by external market factors or investor sentiment rather than changes in underlying net asset value alone. The elevated peaks in P/BV ratios signal periods when the market potentially valued the company’s shares at a premium beyond its book equity growth.