We publish no single base value for Cadence Design Systems. Our valuation methods put it between $218.79 and $243.44 a share. The valuation code's reason: no point fair value: the two anchors behind it compound the same growth rate and differ only in how they end — a perpetuity at the terminal rate against a multiple on the final year — so the midpoint between them measures terminal treatment rather than what the business is worth. The published range is the same reading with the false precision removed: read it as the span the method supports, and treat neither edge as a point estimate.
| Method | Value | vs price | Basis |
|---|---|---|---|
| Discounted cash flow | $218.79 | -34.4% | free cash flow $1.76bn, growth 17.64% for 5 years, then fading to 3% over 5 more, discounted at 10.04%; stress floor $100.94 |
| Exit multiple (P/E) | $243.44 | -27.0% | earnings per share $4.85 valued at 46.21× (the stock's own median P/E) in 5 years, discounted back |
| Sum of the parts | — | — | no sum of the parts: this run holds no segment disclosure for the name |
| Price to sales | — | — | not reached: the cash-flow or earnings methods produced an anchor, so this fallback was not run |
| Tangible book | — | — | used only for lenders, where book value is the business |
| Price to FFO (REITs) | — | — | used only for REITs |
Each working is rebuilt by code from the valuation's own figures and checked against the published value.
The discount rate:
| Risk-free rate | 5.13% (10-year US Treasury yield) |
| Company's own beta | 1.10 (5 years of monthly returns against the S&P 500; standard error 0.21) |
| Peer beta | 1.25 (median of 14 S&P 500 Application Software companies) |
| Blend of own and peers | 1.14 (72% own, 28% peers, weighted by how precisely the company's own beta is measured) |
| Adjusted beta | 1.09 (0.67 × 1.14 + 0.33, pulled toward the market's 1.0) |
| Equity risk premium | 4.5% |
| Discount rate = risk-free + adjusted beta × premium | 10.04% |
Free cash flow grows 17.64% a year for 5 years, then fades in equal steps toward 3% over 5 more; each year is discounted by 1 ÷ (1 + rate)^year:
| Year | Growth | Free cash flow | Discount factor | Present value |
|---|---|---|---|---|
| Now | — | $1.76bn | — | — |
| Year 1 | 17.64% | $2.07bn | 0.9088 | $1.89bn |
| Year 2 | 17.64% | $2.44bn | 0.8259 | $2.02bn |
| Year 3 | 17.64% | $2.87bn | 0.7506 | $2.16bn |
| Year 4 | 17.64% | $3.38bn | 0.6821 | $2.30bn |
| Year 5 | 17.64% | $3.97bn | 0.6199 | $2.46bn |
| Year 6 | 15.20% | $4.58bn | 0.5634 | $2.58bn |
| Year 7 | 12.76% | $5.16bn | 0.5120 | $2.64bn |
| Year 8 | 10.32% | $5.69bn | 0.4653 | $2.65bn |
| Year 9 | 7.88% | $6.14bn | 0.4229 | $2.60bn |
| Year 10 | 5.44% | $6.48bn | 0.3843 | $2.49bn |
| Terminal value = year-10 cash flow × (1 + 3%) ÷ (10.04% − 3%) | $94.83bn |
| Terminal value in today's money | $36.45bn |
| Present value of years 1–10 | $23.78bn |
| Total present value | $60.23bn |
| Shares outstanding | 275.28m |
| Value per share = total ÷ shares | $218.79 |
How the DCF value moves with the discount rate and the starting growth (the middle cell is the published value):
| Discount rate | Growth 12.64% | Growth 17.64% | Growth 22.64% |
|---|---|---|---|
| 9.04% | $194.40 | $260.19 | $346.28 |
| 10.04% | $164.44 | $218.79 | $289.72 |
| 11.04% | — | $187.92 | $247.60 |
The same DCF at each beta, starting growth unchanged:
| Beta | Value | Discount rate | DCF value |
|---|---|---|---|
| Company's own beta | 1.10 | 10.08% | $217.21 |
| Peer beta | 1.25 | 10.75% | $195.74 |
| Adjusted beta (used) | 1.09 | 10.04% | $218.79 |
Earnings per share grow on the same fading path as the DCF:
| Year | Growth | Earnings per share |
|---|---|---|
| Now | — | $4.85 |
| Year 1 | 17.64% | $5.70 |
| Year 2 | 13.98% | $6.50 |
| Year 3 | 11.23% | $7.23 |
| Year 4 | 9.18% | $7.90 |
| Year 5 | 7.63% | $8.50 |
| Earnings per share in year 5 | $8.50 |
| Exit P/E (the stock's own median P/E) | 46.21× |
| Value in 5 years = earnings × P/E | $392.69 |
| Discounted at 10.04% over 5 years: ÷ 1.6131 | $243.44 |
We publish no single base value for Cadence Design Systems. Our valuation methods put it between $218.79 and $243.44 a share. The valuation code's reason: no point fair value: the two anchors behind it compound the same growth rate and differ only in how they end — a perpetuity at the terminal rate against a multiple on the final year — so the midpoint between them measures terminal treatment rather than what the business is worth. The published range is the same reading with the false precision removed: read it as the span the method supports, and treat neither edge as a point estimate.
One-year price simulation: a 10% chance the price is below $190.76 and a 10% chance it is above $584.90 in a year; a 50% chance it is higher than today's $333.32, from 43.49% volatility. The simulation assumes the price drifts up at our discount rate of 10.04% a year.
At $333.32 the price implies free cash flow growing 25.2% a year for five years and then fading toward 3% over five more; its revenue has grown 17.6%.
| Week | Price | Base value |
|---|---|---|
| 2 Oct 2026 | $351.35 | — |
| 9 Oct 2026 | $352.84 | — |
| 16 Oct 2026 | $319.51 | — |
| 23 Oct 2026 | $316.49 | — |
| 30 Oct 2026 | $327.89 | — |
| 6 Nov 2026 | $319.92 | — |
| 12 Nov 2026 | $333.32 | — |
Data as of 12 Nov 2026; financials to 30 Sep 2026. Sources: company filings via EODHD, SEC EDGAR, US Treasury. How these values are computed. Not investment advice.
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