Cadence Design Systems Inc. (NASDAQ:CDNS)

Price to Earnings (P/E) Ratio

The P/E ratio shows data beginning in late 2020 and exhibits fluctuations over subsequent quarters through early 2025. Starting at 62.89, the ratio slightly decreased to 59.14 by October 2021 before rising again to a peak of 78.64 in December 2023. Following this peak, the ratio experiences moderate volatility but maintains relatively high values, closing near 75.17 by March 2025. This pattern suggests periods of increase in market valuation relative to earnings, with some corrections but overall elevated investor expectations.

Price to Operating Profit (P/OP) Ratio

Available from the same starting point as the P/E ratio, the P/OP ratio demonstrates a declining trend from 57.54 in March 2020 to a low of 41.53 by December 2022. Subsequently, it rises to a maximum of 65.43 in December 2023, followed by some fluctuation and a downward adjustment, ending at 55.59 in March 2025. This indicates varying market sentiments about the company's operating profitability, with initial decreases possibly reflecting concern or adjustment, and later increases suggesting improved confidence or growth prospects.

Price to Sales (P/S) Ratio

The P/S ratio starts at 13.85 in March 2020 and remains generally within a range of approximately 12.5 to 20 over the analyzed period. Notably, there is an upward trajectory peaking at 20.02 in December 2023, indicating stronger market valuation relative to sales. After this peak, the ratio moderates somewhat but stays elevated through early 2025. This trend reflects a positive investor outlook on revenue generation capabilities, with increased willingness to pay for each unit of sales.

Price to Book Value (P/BV) Ratio

The P/BV ratio begins at 10.07 in March 2020 and rises steadily to a high of 24.05 by December 2023, representing a substantial increase in market valuation relative to book value. After reaching this peak, the ratio declines notably to 15.15 by September 2024, partially recovering to 17.02 by March 2025. This pattern suggests strong initial investor confidence in the company's net asset value, followed by a period of correction or reevaluation.

The analysis of the quarterly financial data reveals several noteworthy trends and patterns in the share price, earnings per share (EPS), and price-to-earnings (P/E) ratio over the observed periods.

Share Price

Starting from March 2020 with a value of $77.84, the share price generally exhibited an upward trajectory through to the end of 2023. There were some fluctuations, such as a dip from $167.37 at October 2021 to $135.21 by December 2021, followed by recovery and growth reaching a peak of $300.74 by December 2023.

In 2024, the share price showed some volatility, with highs around $290 in September and lows around $258 in March 2025. Overall, the share price more than tripled over the five-year span, indicating strong market performance despite interim fluctuations.

Earnings Per Share (EPS)

The data for EPS starts in December 2020 at $2.12 and shows consistent growth through the subsequent quarters. EPS increased steadily from $2.12 to $3.96 by March 2025, signaling improving profitability at a relatively stable and moderate growth rate.

This progression reflects well on the company’s earnings generation capacity and suggests effective management and favorable operational outcomes during the periods covered.

Price-to-Earnings (P/E) Ratio

The P/E ratio fluctuates between approximately 53.88 and 78.64 across the observed quarters. Notably, there is considerable volatility in the P/E ratio, with spikes occurring notably at December 2023 (78.64) and high values continuing into 2024.

The variability in P/E suggests changing market expectations and investor sentiment regarding future earnings prospects. Higher P/E ratios may indicate periods of optimism or premium valuation, while the declines suggest moments of more cautious outlook or corrections.

In summary, the share price trend conveys strong capital appreciation over the period, supported by steadily rising earnings per share. The elevated and fluctuating P/E ratios imply a market environment characterized by varying degrees of investor confidence and valuation adjustments. Together, these metrics indicate a company demonstrating solid financial growth, tempered by market dynamics affecting valuation multiples.

Share Price Trend

The share price exhibited an overall upward trajectory over the observed periods. Beginning at $77.84 in March 2020, it increased significantly to peak near $300.74 in December 2023. Despite some volatility, including declines around December 2021 and mid-2024, the price consistently maintained higher levels in the later periods compared to the initial quarters.

Operating Profit Per Share Trend

Operating profit per share demonstrated steady and continuous growth from the point it was first available in December 2020 at $2.31, reaching $5.36 by March 2025. This indicates improving operational profitability on a per-share basis, with consistent quarterly increments and no periods of decline observed in the data.

Price to Operating Profit Ratio (P/OP) Trend

The price to operating profit per share ratio fluctuated throughout the periods with no clear sustained direction. Initially available in December 2020 at 57.54, the ratio decreased and oscillated, hitting lows in 2022 around the low 40s and then increasing again to mid-60s by December 2023. Subsequently, the ratio showed a downward adjustment, ending around 55.59 in March 2025. These fluctuations suggest variable market sentiment or changing perceptions of the company's valuation relative to its profitability.

Relationship Between Share Price and Operational Profitability

While both the share price and operating profit per share generally increased over time, their rates of change varied, leading to the observed variability in the P/OP ratio. The continuous growth in operating profit per share reflects improving company performance, whereas the more volatile share price movements and resulting fluctuating P/OP ratio highlight shifting investor valuation standards or external market factors beyond pure earnings growth.

The analysis of the quarterly financial data reveals several notable trends regarding the share price, sales per share, and price-to-sales (P/S) ratio over the periods observed.

Share Price

The share price displayed a general upward trend from March 2020 through December 2025, starting at $77.84 and reaching a peak of $300.74 in December 2023. The price experienced fluctuations within this overall increase, such as a decline from $167.37 in October 2021 to $135.21 in December 2021, followed by a recovery and further growth. Noteworthy is the significant spike between December 2022 and December 2023, escalating from $185.7 to $300.74, before retreating modestly towards the end of the period but still maintaining a higher level relative to the early years.

Sales Per Share

Sales per share data, although starting from April 2021, exhibited a consistent and steady increase across subsequent quarters. Beginning at $9.62 and rising to $17.85 by March 2025, this growth reflects sustained expansion in revenue attributable to each outstanding share. Minor decelerations or plateaus were minimal, indicating strong sales performance and effective revenue growth strategies over time.

Price-to-Sales (P/S) Ratio

The P/S ratio demonstrated fluctuating behavior, indicative of varying investor sentiment or changes in market valuation relative to sales. Initially recorded at 13.85 in April 2021, it oscillated between approximately 12.55 and 20.02 through the observed quarters. The highest ratio appeared in December 2023 at 20.02, coinciding with the share price peak, suggesting elevated market valuation relative to sales during that period. Subsequently, the ratio declined toward 15.26 in March 2025, possibly denoting a normalization or adjustment in market expectations relative to sales growth.

Overall, the data indicates strong growth in sales per share parallel to an increasing share price, with the P/S ratio reflecting changing market perceptions and valuation multiples over the timeframe. The increases in sales per share underpin the robustness of operating performance, while variability in the P/S ratio suggests fluctuating investor confidence or valuation dynamics. The general uptrend in share price, coupled with rising sales, points toward positive market reception and growth prospects for the company during these periods.

The analysis of the financial data for the specified periods reveals notable trends in share price, book value per share (BVPS), and the price-to-book value (P/BV) ratio.

Share Price

The share price exhibited a general upward trend from March 28, 2020, through December 31, 2023, increasing from $77.84 to a peak of $300.74. This reflects substantial growth in market valuation over this period. However, after this peak, there was some volatility, with prices fluctuating between $258.34 and $297.74. Notably, there was a decline from the high of $300.74 in December 2023 to $266.34 in June 2024, followed by a partial recovery to $297.74 by March 31, 2025.

Book Value per Share (BVPS)

The BVPS showed a steady and consistent increase throughout the entire timeframe, rising from $7.73 in March 2020 to $17.49 in March 2025. This steady growth may indicate consistent accumulation of equity and overall firm value enhancement on a per-share basis without significant periods of setback.

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

The P/BV ratio demonstrated significant volatility, moving between a low of approximately 10.07 in March 2020 and peaking at 24.05 in December 2023. Initial increases in this ratio suggest growing market optimism and valuation premiums relative to book value. The ratio peaked alongside the share price in late 2023, implying heightened investor expectations or confidence relative to the underlying book value. Post-peak, the P/BV ratio experienced a decline to about 15.15 by December 2024, indicating either a correction in market valuation or a catch-up in book value relative to price. However, a slight increase to 17.02 in March 2025 suggests some recovery in market valuation premium.

Overall, the data suggests strong growth in both market valuation and underlying book value per share, with market sentiments experiencing more pronounced fluctuations than the fundamental book value. The recent volatility in both share price and P/BV ratio may reflect changing investor perceptions or external market conditions affecting valuation multiples.