AlphaMadera's AlphaVal page classifies Cadence Design Systems, Inc. as a Platform & Compounding FCF business and values it using Two-stage FCF DCF, then compares the result to the current market price to flag CDNS as undervalued, fairly valued, or overvalued.

What is Cadence Design Systems, Inc.'s fair value?

Fair value for CDNS comes from a Two-stage FCF DCF model -- the approach AlphaVal selected for this company's Platform & Compounding FCF classification. The live AlphaVal page shows bear, base, and bull scenarios alongside the key assumption behind each.

How does AlphaMadera value CDNS?

AlphaVal routes each company to one of ten valuation archetypes based on its business model. CDNS was classified as Platform & Compounding FCF and is valued using Two-stage FCF DCF, built from CDNS's most recent reported fundamentals.

CDNS - Cadence Design Systems, Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $404.56 DETAILS

AlphaVal

Deterministic, archetype-aware fair value

Platform & Compounding FCF 80% confidence

Primary model: Two-stage FCF DCF

Valuation Signal Overvalued Strong

Trading 107.6% above fair value

Current Price $340.39

Bear Case $102.49 69.9% downside ($102.49 - $340.39) / $340.39 = -69.9% 10% stage 1 growth, 11% discount

Fair Value $163.95 51.8% downside ($163.95 - $340.39) / $340.39 = -51.8% 16% stage 1 growth, 11% discount

Bull Case $233.93 31.3% downside ($233.93 - $340.39) / $340.39 = -31.3% 21% stage 1 growth, 11% discount

Adjust Assumptions

DCF Stage 1 Growth Rate

15.9%

Discount Rate (WACC)

11.0%

Terminal Growth Rate

3.0%

Key Value Driver

FCF growth rate (16% base case)

Terminal Value % of EV 43%

Implied Market Multiple 70.1x

Market is pricing in (growth) 25.7% vs our 15.9% base

Plain-Language Summary

Using a two-stage FCF DCF with 16% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $163.95 per share.

Analyst Consensus (External Reference)

Never blended into the bear/base/bull estimates above -- shown only as an outside comparison.

Average Target (31 analysts) $404.56

Analyst Range $300.00 – $450.00

Divergence from AlphaVal 59%

Warnings

⚠ Stock-based employee pay equals 41% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.

ℹ Wall Street's average price target is $404.56 (from 31 analysts). Our estimate is 59% below the consensus -- consider that gap carefully.

Key Risks

P/E alone misleads — earnings depressed by growth investment
Cyclical or commodity businesses may be misclassified as platforms
Terminal value dominance suggests sensitivity to long-run assumptions