Synopsys, Inc.
Synopsys, Inc. Fundamental Analysis
Synopsys, Inc. (SNPS) shows moderate financial fundamentals with a PE ratio of 53.22, profit margin of 18.89%, and ROE of 7.09%. The company generates $8.4B in annual revenue with strong year-over-year growth of 15.01%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 71.9/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze SNPS's fundamental strength across five key dimensions:
Efficiency Score
WeakSNPS struggles to generate sufficient returns from assets.
Valuation Score
ModerateSNPS shows balanced valuation metrics.
Growth Score
ExcellentSNPS delivers strong and consistent growth momentum.
Financial Health Score
ExcellentSNPS maintains a strong and stable balance sheet.
Profitability Score
ModerateSNPS maintains healthy but balanced margins.
Key Financial Metrics
Is SNPS Expensive or Cheap?
P/E Ratio
SNPS trades at 53.22 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, SNPS's PEG of -1.43 indicates potential undervaluation.
Price to Book
The market values Synopsys, Inc. at 2.50 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 29.31 times EBITDA. This signals the market has high growth expectations.
How Well Does SNPS Make Money?
Net Profit Margin
For every $100 in sales, Synopsys, Inc. keeps $18.89 as profit after all expenses.
Operating Margin
Core operations generate 12.97 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $7.09 in profit for every $100 of shareholder equity.
ROA
Synopsys, Inc. generates $2.76 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Synopsys, Inc. produces operating cash flow of $1.81B, showing steady but balanced cash generation.
Free Cash Flow
Synopsys, Inc. generates strong free cash flow of $1.61B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $8.42 in free cash annually.
FCF Yield
SNPS converts 1.59% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
53.22
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-1.43
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.50
vs 25 benchmark
P/S Ratio
Price to sales ratio
12.005
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.50
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.62
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.07
vs 25 benchmark
ROA
Return on assets percentage
0.03
vs 25 benchmark
ROCE
Return on capital employed
0.02
vs 25 benchmark
How SNPS Stacks Against Its Sector Peers
| Metric | SNPS Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 53.22 | 35.19 | Worse (Expensive) |
| ROE | 7.09% | 1155.00% | Weak |
| Net Margin | 18.89% | -127067.00% (disorted) | Strong |
| Debt/Equity | 0.50 | 0.41 | Weak (High Leverage) |
| Current Ratio | 1.62 | 4.71 | Neutral |
| ROA | 2.76% | -314918.00% (disorted) | Weak |
SNPS outperforms its industry in 1 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Synopsys, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
78.51%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
316.09%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
72.02%
Industry Style: Growth, Innovation, High Beta
High Growth