Cadence Design Systems Stock Beneish M Score

CDNS Stock  USD 285.02  4.77  1.70%   
This module uses fundamental data of Cadence Design to approximate the value of its Beneish M Score. Cadence Design M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Check out Cadence Design Piotroski F Score and Cadence Design Altman Z Score analysis.
  
At this time, Cadence Design's Short and Long Term Debt Total is comparatively stable compared to the past year. Short Term Debt is likely to gain to about 410.4 M in 2024, whereas Long Term Debt Total is likely to drop slightly above 455.7 M in 2024. At this time, Cadence Design's ROIC is comparatively stable compared to the past year. Net Income Per Share is likely to gain to 4.06 in 2024, whereas Free Cash Flow Yield is likely to drop 0.02 in 2024.
At this time, it appears that Cadence Design Systems is an unlikely manipulator. The earnings manipulation may begin if Cadence Design's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Cadence Design executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Cadence Design's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.58
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables

1.0

Focus
Asset Quality

1.02

Focus
Expense Coverage

0.6

Focus
Gross Margin Strengs

0.72

Focus
Accruals Factor

0.6

Focus
Depreciation Resistance

0.92

Focus
Net Sales Growth

1.05

Focus
Financial Leverage Condition

1.0

Focus

Cadence Design Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Cadence Design's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Net Receivables532.1 M506.8 M
Sufficiently Up
Slightly volatile
Total Revenue4.3 B4.1 B
Sufficiently Up
Slightly volatile
Total AssetsB5.7 B
Sufficiently Up
Slightly volatile
Total Current Assets2.1 BB
Sufficiently Up
Slightly volatile
Non Current Assets Total3.9 B3.7 B
Sufficiently Up
Slightly volatile
Property Plant Equipment251.3 M334.3 M
Way Down
Pretty Stable
Depreciation And Amortization118.9 M140.4 M
Fairly Down
Slightly volatile
Selling General Administrative152.6 M242.4 M
Way Down
Slightly volatile
Total Current Liabilities1.7 B1.6 B
Sufficiently Up
Slightly volatile
Non Current Liabilities Total449 M674.4 M
Way Down
Slightly volatile
Short Term Debt410.4 M390.9 M
Sufficiently Up
Very volatile
Operating Income1.3 B1.3 B
Sufficiently Up
Slightly volatile
Short Term Investments136.9 M130.4 M
Sufficiently Up
Very volatile
Long Term Investments122.3 M138.3 M
Fairly Down
Slightly volatile
Gross Profit Margin0.640.8892
Way Down
Very volatile

Cadence Design Systems Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Cadence Design's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Cadence Design in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Cadence Design's degree of accounting gimmicks and manipulations.

About Cadence Design Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Depreciation And Amortization

118.88 Million

At this time, Cadence Design's Depreciation And Amortization is comparatively stable compared to the past year.

Cadence Design Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Cadence Design. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201920202021202220232024 (projected)
Net Receivables304.5M338.5M337.6M486.7M506.8M532.1M
Total Revenue2.3B2.7B3.0B3.6B4.1B4.3B
Total Assets3.4B4.0B4.4B5.1B5.7B6.0B
Total Current Assets1.2B1.5B1.7B1.7B2.0B2.1B
Net Debt(359.2M)(581.6M)(741.4M)(134.2M)(202.1M)(212.2M)
Short Term Debt100M25.6M33.9M25.3M390.9M410.4M
Long Term Debt346.0M346.8M347.6M648.1M299.8M388.2M
Operating Income491.8M645.6M779.1M1.1B1.3B1.3B
Investments(30.8M)217K128K(738.6M)(377.7M)(358.9M)

Cadence Design ESG Sustainability

Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, Cadence Design's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Cadence Design's managers, analysts, and investors.
Environment Score
Governance Score
Social Score

About Cadence Design Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Cadence Design Systems's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Cadence Design using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Cadence Design Systems based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.

Pair Trading with Cadence Design

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Cadence Design position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cadence Design will appreciate offsetting losses from the drop in the long position's value.

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The ability to find closely correlated positions to Cadence Design could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Cadence Design when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Cadence Design - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Cadence Design Systems to buy it.
The correlation of Cadence Design is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Cadence Design moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Cadence Design Systems moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Cadence Design can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
When determining whether Cadence Design Systems is a strong investment it is important to analyze Cadence Design's competitive position within its industry, examining market share, product or service uniqueness, and competitive advantages. Beyond financials and market position, potential investors should also consider broader economic conditions, industry trends, and any regulatory or geopolitical factors that may impact Cadence Design's future performance. For an informed investment choice regarding Cadence Stock, refer to the following important reports:
Check out Cadence Design Piotroski F Score and Cadence Design Altman Z Score analysis.
You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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Is Cadence Design's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Cadence Design. If investors know Cadence will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Cadence Design listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
0.351
Earnings Share
3.81
Revenue Per Share
15.183
Quarterly Revenue Growth
0.188
Return On Assets
0.1474
The market value of Cadence Design Systems is measured differently than its book value, which is the value of Cadence that is recorded on the company's balance sheet. Investors also form their own opinion of Cadence Design's value that differs from its market value or its book value, called intrinsic value, which is Cadence Design's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Cadence Design's market value can be influenced by many factors that don't directly affect Cadence Design's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Cadence Design's value and its price as these two are different measures arrived at by different means. Investors typically determine if Cadence Design is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Cadence Design's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.