Is CDNS a high-quality business?

AlphaMadera's AlphaQuality grade scores Cadence Design Systems, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how CDNS compares to a Buffett-style quality bar.

What is Cadence Design Systems, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to CDNS based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes CDNS a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

CDNS - Cadence Design Systems, Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $370.83 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Platform & Compounding FCF

AlphaQuality — archetype-weighted quantitative grade

A- 84.6 / 100 composite

Composite Grade

Composite of six pillars weighted for platform & compounding fcf businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 25%

B 72.0

5yr Avg ROIC 11.5% 68/100
Operating Margin Trend +0.91 pp/yr 82/100

Capital Efficiency

Weight: 15%

A- 81.1

5yr Avg ROE 17.4% 86/100
5yr Share-Count CAGR -0.5% 73/100

Growth Quality

Weight: 25%

A 90.4

5yr Revenue CAGR 15.4% 91/100
5yr EPS CAGR 12.9% 84/100
Revenue-Growth Years (5) 5/5 100/100

Cash Generation

Weight: 20%

A+ 97.8

5yr FCF Margin 30.1% 100/100
5yr FCF/NI Conversion 1.30x 95/100

Balance Sheet

Weight: 10%

A+ 95.7

Net Debt / EBITDA -0.28x 96/100
Interest Coverage (EBIT/Int) 14.06x 91/100
Altman Z-Score 13.04 100/100

Stability

Weight: 5%

C 52.9

EPS Volatility (σ/μ) 0.56 25/100
Piotroski F-Score 5 56/100
Negative-Revenue Years (5) 0/5 100/100

4 of 4 gurus held; 3 added; 1 trimmed.

Holders: 4
Avg Δ position: +1959.7%
New buys: 0
Full exits: 0

Cooperman increased +3960%
Wood increased +3914%
Dalio decreased -39%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (25%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (25%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (20%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (10%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (5%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.