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If You Invested $1000 in Cadence Design Systems 10 Years Ago, This Is How Much You'd Have Now

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For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.

Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.

What if you'd invested in Cadence Design Systems (CDNS) ten years ago? It may not have been easy to hold on to CDNS for all that time, but if you did, how much would your investment be worth today?

Cadence Design Systems' Business In-Depth

With that in mind, let's take a look at Cadence Design Systems' main business drivers.

Based in San Jose, CA, Cadence Design Systems Inc. (CDNS) offers products and tools that help customers to design electronic products. Through System Design Enablement (SDE) strategy the company offers software, hardware, services and reusable IC design blocks (IPs) to electronic systems and semiconductor customers.

Cadence’s core electronic design automation (EDA) software and services enable engineers to develop different types of ICs. Its design IP’s are directly integrated into the ICs.

System Connect tools and services are used for the design, analysis and verification of PCBs. Further, System Integration solutions aid in designing and analyzing systems as well as verifying system functionality.

Cadence reported revenues of $2.683 billion in 2020.

The major product lines are as follows:

Functional verification products (22% of total 2020 revenues) comprise four primary verification engines – JasperGold formal verification platform, Xcelium parallel simulation platform, Palladium Z1 enterprise emulation platform and Protium S1 FPGA-based prototyping platform.

Digital IC Design and Signoff (29%) offerings include Genus synthesis, Stratus high-level synthesis, Joules RTL power and Modus test solutions. Innovus implementation system is the company’s physical implementation offering. Tempus timing and Voltus power analysis, Quantus QRC extraction solutions, Physical Verification System and DFM are the signoff solutions.

Custom IC Design and Simulation (25%) includes the Virtuoso custom design platform. Virtuoso Advanced Node, Virtuoso Electrically Aware Design (EAD) and Spectre XPS FastSPICE Simulator are new products in the segment.

Systems Design & Analysis segment (10%) offers Allegro system interconnect design platform, Sigrity analysis tools and OrCAD solution.

Under the IP segment (14%), Cadence offers Tensilica DSPs, vertically targeted subsystems for audio/voice, baseband and vision/imaging applications, controllers and physical interfaces (PHYs) for standard protocols and analog IP.

In 2020, the company derived 41% of revenues from Americas, while the balance 59% came from its international operations.

Bottom Line

While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Cadence Design Systems ten years ago, you're probably feeling pretty good about your investment today.

According to our calculations, a $1000 investment made in July 2011 would be worth $14,114.23, or a 1,311.42% gain, as of July 30, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.

Compare this to the S&P 500's rally of 241.97% and gold's return of 8.14% over the same time frame.

Looking ahead, analysts are expecting more upside for CDNS.

Cadence’s Q2 results benefitted from strength across segments like digital & signoff solutions and functional verification suite. The company is also benefiting from higher investments on emerging trends like Internet of Things (IoT) and autonomous vehicle sub-systems along with strength in semiconductor end-market. Frequent product launches are expected to help the company sustain top-line growth, going ahead. The company raised 2021 revenue guidance on strong performance in the second quarter, despite COVID-19 related uncertainty. Increasing costs related to research and development as well as headcount additions are likely to dent margins at least in the near term. Stiff competition in simulation market and significant forex volatility are other concerns. Shares of the company have underperformed the industry on a year-to-date basis.

The stock has jumped 6.48% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 5 higher, for fiscal 2021; the consensus estimate has moved up as well.
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