In the rapidly evolving tech landscape, I find myself drawn to two prominent players: Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC). Both companies operate in the software application industry, yet they pursue distinct innovation strategies that cater to overlapping markets. Cadence focuses on integrated circuit design and verification, while PTC specializes in digital transformation and augmented reality solutions. This article will delve into their strengths and weaknesses, helping you determine which company might be the most intriguing addition to your investment portfolio.
Table of contents
Company Overview
Cadence Design Systems, Inc. Overview
Cadence Design Systems, Inc. (CDNS) is a leading provider of software, hardware, and services for electronic design automation, primarily focusing on integrated circuit (IC) design. Headquartered in San Jose, California, the company offers a comprehensive suite of tools for functional verification, digital IC design, and system design analysis. Cadence serves diverse markets, including 5G communications, automotive, and aerospace, emphasizing innovation and efficiency in chip design. With a market capitalization of approximately $84.88B, Cadence’s robust portfolio supports complex design processes, ensuring that clients can bring cutting-edge technology to market effectively.
PTC Inc. Overview
PTC Inc. (PTC) operates as a software and services company that facilitates digital transformation across various industries. Based in Boston, Massachusetts, PTC provides solutions such as the ThingWorx platform for IoT applications and Vuforia for augmented reality. The company’s offerings also include CAD and product lifecycle management software, catering to a global clientele. With a market capitalization of around $21.02B, PTC focuses on enhancing productivity and collaboration through advanced technological tools, making it a significant player in the software application space.
Key similarities and differences
Both Cadence and PTC are key players in the software application industry, leveraging technology to enhance design and operational efficiency. However, while Cadence specializes in electronic design automation for ICs, PTC emphasizes digital transformation across broader industrial applications, including IoT and augmented reality. Their distinct focuses reflect their unique market positions and customer bases.
Income Statement Comparison
The following table presents a comparison of key income statement metrics for Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC) for their most recent fiscal years.
| Metric | CDNS | PTC |
|---|---|---|
| Market Cap | 85B | 21B |
| Revenue | 4.64B | 2.74B |
| EBITDA | 1.67B | 1.06B |
| EBIT | 1.47B | 930M |
| Net Income | 1.06B | 741M |
| EPS | 3.89 | 6.18 |
| Fiscal Year | 2024 | 2025 |
Interpretation of Income Statement
In the most recent fiscal year, Cadence Design Systems (CDNS) experienced a revenue increase of approximately 6% compared to the previous year, reflecting strong demand for its software solutions. PTC also showed growth, with a significant rise in revenue from 2.30B to 2.74B, indicating robust performance in its product lines. While CDNS maintained a higher EBITDA margin, PTC’s net income margin improved slightly due to better cost management. Overall, both companies demonstrated resilience, but CDNS continues to lead in absolute revenue and profitability metrics.
Financial Ratios Comparison
The following table provides a comparative overview of the most recent financial ratios for Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC).
| Metric | CDNS | PTC |
|---|---|---|
| ROE | 22.58% | 19.33% |
| ROIC | 13.43% | 14.77% |
| P/E | 77.20 | 32.88 |
| P/B | 17.44 | 6.36 |
| Current Ratio | 2.93 | 0.96 |
| Quick Ratio | 2.74 | 0.96 |
| D/E | 0.55 | 0.36 |
| Debt-to-Assets | 28.80% | 20.68% |
| Interest Coverage | 17.77 | 4.91 |
| Asset Turnover | 0.52 | 0.41 |
| Fixed Asset Turnover | 7.68 | 15.58 |
| Payout ratio | 0% | 0% |
| Dividend yield | 0% | 0% |
Interpretation of Financial Ratios
From the analysis, CDNS exhibits a stronger current and quick ratio, indicating better liquidity compared to PTC. However, PTC shows a more favorable price-to-earnings (P/E) ratio, suggesting it may be undervalued relative to earnings, while CDNS has higher debt levels. The interest coverage ratio is significantly higher for CDNS, which is a positive indicator of its ability to cover interest expenses, unlike PTC, which may face higher risk in this area. Overall, investors should consider these ratios in conjunction with market conditions and their investment strategy.
Dividend and Shareholder Returns
Both Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC) do not distribute dividends, primarily due to their focus on reinvestment and growth. This strategy aligns with their high-growth phases and prioritization of R&D. Both companies also engage in share buybacks, indicating a commitment to enhancing shareholder value. While the lack of dividends may seem unfavorable short-term, their approach supports sustainable long-term value creation as they capitalize on market opportunities.
Strategic Positioning
Cadence Design Systems, Inc. (CDNS) holds a market capitalization of $84.88B, positioning it as a leader in the functional verification segment of the software application industry, with a strong focus on 5G and automotive markets. In contrast, PTC Inc. (PTC), valued at $21.02B, competes in digital transformation and product lifecycle management solutions. Both companies face competitive pressure from emerging software technologies and must navigate the risks of rapid technological disruption while striving for market share expansion in their respective niches.
Stock Comparison
In this section, I will analyze the stock price movements of Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC) over the past year, highlighting significant price dynamics and trends that could influence investment decisions.
Trend Analysis
Cadence Design Systems, Inc. (CDNS) Over the past year, CDNS has experienced a price increase of 23.4%, indicating a bullish trend. However, the recent period from September 14, 2025, to November 30, 2025, shows a decline of 9.21%, suggesting a deceleration in momentum. The highest price recorded was $373.35, while the lowest was $232.88. The stock has exhibited volatility with a standard deviation of 29.13.
PTC Inc. (PTC) PTC has seen a price increase of 5.78% over the last year, also reflecting a bullish trend. Yet, in the recent period from September 14, 2025, to November 30, 2025, the stock has decreased by 14.47%, indicating a deceleration in its upward movement. The highest price reached was $215.05, and the lowest was $139.77. PTC has a standard deviation of 15.42, suggesting moderate volatility.
In summary, while both stocks have demonstrated overall bullish trends over the year, recent declines indicate caution. Investors should consider these dynamics and the potential for further fluctuations as they manage their portfolios.
Analyst Opinions
Recent analyst recommendations for Cadence Design Systems, Inc. (CDNS) suggest a “Buy” rating, reflecting strong fundamentals, particularly in return on assets and equity, despite a lower score in price-to-earnings. Analysts emphasize the company’s robust cash flow. PTC Inc. (PTC) also receives a “Buy” rating, with strong scores in return metrics and discounted cash flow, indicating solid growth potential. Overall, the consensus for both companies in 2025 is a “Buy,” suggesting confidence in their growth trajectories and stability.
Stock Grades
In the current market environment, reliable stock grades can provide valuable insights for investors. Here’s a summary of the grades for Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC).
Cadence Design Systems, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | maintain | Overweight | 2025-10-28 |
| Rosenblatt | maintain | Neutral | 2025-10-28 |
| Needham | maintain | Buy | 2025-10-28 |
| Wells Fargo | maintain | Overweight | 2025-10-28 |
| Oppenheimer | maintain | Underperform | 2025-10-28 |
| Baird | maintain | Outperform | 2025-10-28 |
| Rosenblatt | maintain | Neutral | 2025-10-22 |
| Keybanc | maintain | Overweight | 2025-07-29 |
| JP Morgan | maintain | Overweight | 2025-07-29 |
| Stifel | maintain | Buy | 2025-07-29 |
PTC Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Piper Sandler | maintain | Neutral | 2025-11-07 |
| Rosenblatt | maintain | Buy | 2025-11-06 |
| Rosenblatt | maintain | Buy | 2025-10-30 |
| Barclays | maintain | Overweight | 2025-07-31 |
| Piper Sandler | maintain | Neutral | 2025-07-31 |
| Oppenheimer | maintain | Outperform | 2025-07-31 |
| Rosenblatt | maintain | Buy | 2025-07-31 |
| Keybanc | maintain | Overweight | 2025-07-31 |
| RBC Capital | maintain | Outperform | 2025-07-31 |
| Stifel | maintain | Buy | 2025-07-31 |
Overall, the stock grades for both companies reflect a stable outlook, with several maintain actions indicating consistency in analyst views. Notably, both companies have received a mix of bullish and cautious sentiments, which could suggest a balanced risk profile for potential investors.
Target Prices
The target consensus for the selected companies indicates positive expectations from analysts.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Cadence Design Systems, Inc. | 418 | 355 | 396.14 |
| PTC Inc. | 255 | 120 | 213.25 |
Analysts expect Cadence Design Systems, Inc. to reach a consensus target of 396.14, significantly above its current price of 311.84. For PTC Inc., the consensus target of 213.25 also suggests a potential upside from its current price of 175.43.
Strengths and Weaknesses
The following table outlines the strengths and weaknesses of Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC), based on the most recent data available.
| Criterion | Cadence Design Systems (CDNS) | PTC Inc. (PTC) |
|---|---|---|
| Diversification | High (varied product offerings) | Moderate (focused on AR and PLM solutions) |
| Profitability | Strong (net profit margin 27%) | Moderate (net profit margin 27%) |
| Innovation | High (continuous product development) | High (advanced tech in AR and IoT) |
| Global presence | Strong (operates worldwide) | Strong (global customer base) |
| Market Share | Significant (leading in software for IC design) | Competitive (increasing share in AR) |
| Debt level | Low (debt to equity ratio 0.55) | Moderate (debt to equity ratio 0.36) |
Key takeaways from this analysis indicate that both companies exhibit strong profitability and innovation. However, Cadence Design Systems stands out with a lower debt level and a more diversified product portfolio compared to PTC.
Risk Analysis
This table outlines the key risks associated with Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC):
| Metric | Cadence Design Systems (CDNS) | PTC Inc. (PTC) |
|---|---|---|
| Market Risk | Moderate | High |
| Regulatory Risk | Low | Moderate |
| Operational Risk | Moderate | High |
| Environmental Risk | Low | Moderate |
| Geopolitical Risk | Moderate | High |
In summary, both companies face significant market and operational risks, particularly PTC, which is more exposed to geopolitical uncertainties. Recent economic fluctuations and changes in regulatory landscapes can further elevate these risks.
Which one to choose?
When comparing Cadence Design Systems, Inc. (CDNS) and PTC Inc. (PTC), several key metrics highlight the strengths and weaknesses of each company. CDNS boasts a higher gross profit margin at 86% compared to PTC’s 82%, reflecting superior cost management. However, PTC demonstrates a better price-to-earnings ratio at 32.88, suggesting a more favorable valuation relative to earnings. Analysts have rated both companies as “B” for CDNS and “B+” for PTC, indicating that PTC is slightly preferred in overall performance. Stock trends reveal a bullish outlook for both, yet CDNS exhibits a recent decline of 9.21%, while PTC has fallen by 14.47%, indicating potential volatility.
For growth-oriented investors, PTC may be more appealing due to its more robust valuation metrics. Conversely, if you prioritize strong margins and operational efficiency, CDNS could be the better choice. However, both companies face risks related to competition and market dynamics.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Cadence Design Systems, Inc. and PTC Inc. to enhance your investment decisions:
