SNPSSNPS
US • —
$373.47
P/E
86.55
PEG
—
FCF Yield
2.8%
Rev Growth YoY
+39.5% YoY
Gross Margin
73.5%
Health Score
7/10
D/E Ratio
0.48
Confidence
LOW
Business Snapshot
Synopsys provides electronic design automation (EDA) software and semiconductor IP used to design and verify complex chips and electronic systems. The company operates as a dominant leader in the EDA market, competing primarily with Cadence Design Systems and Siemens EDA. With a market capitalisation of $71.45 billion, Synopsys is a large-cap technology company benefiting from secular trends in chip complexity, AI, and advanced manufacturing nodes. A defining characteristic is its deeply entrenched position in chip design workflows, creating high switching costs and recurring subscription-based revenue. Its free cash flow of $2.00 billion further underscores the financial strength generated by this model.
Financial Health
Synopsys reports a gross margin of 73.5%, indicating strong pricing power and a high-value software/IP product mix, though comparable prior-year data is unavailable for trend analysis. Net margin stands at a relatively thin 8.9%, a figure that should be considered in context with the reported earnings decline (see Growth Momentum)...
Risk Assessment
- VALUATION — P/E of 86.55x is dramatically elevated versus the sector average of 22x, representing a compression risk if growth slows.
- EARNINGS QUALITY — Despite 3 of 4 recent quarters beating estimates, reported earnings growth of -68.8% YoY represents a significant deterioration from the revenue trajectory.
- TECHNICALS — RSI, MACD, and moving average data unavailable for this period; momentum cannot be independently confirmed.
- VALUATION DIVERGENCE — The DCF fair value estimate of ~$300.49 suggests the current price of $373.47 represents a potential premium, while no FMP DCF value was provided for comparison....
Synopsys reports a gross margin of 73.5%, indicating strong pricing power and a high-value software/IP product mix, though comparable prior-year data is unavailable for trend analysis. Net margin stands at a relatively thin 8.9%, a figure that should be considered in context with the reported earnings decline (see Growth Momentum). The balance sheet is healthy, with a debt-to-equity ratio of just 0.48x and a current ratio of 1.62x, providing ample liquidity and financial flexibility. Free cash flow is a robust $2.00 billion, generating a free cash flow yield of 2.8%, which supports reinvestment in R&D and potential shareholder returns. Overall, the company exhibits solid financial health characterised by strong cash generation, a conservative capital structure, and high gross margins, allowing it to invest in long-term growth initiatives.
- VALUATION — P/E of 86.55x is dramatically elevated versus the sector average of 22x, representing a compression risk if growth slows. - EARNINGS QUALITY — Despite 3 of 4 recent quarters beating estimates, reported earnings growth of -68.8% YoY represents a significant deterioration from the revenue trajectory. - TECHNICALS — RSI, MACD, and moving average data unavailable for this period; momentum cannot be independently confirmed. - VALUATION DIVERGENCE — The DCF fair value estimate of ~$300.49 suggests the current price of $373.47 represents a potential premium, while no FMP DCF value was provided for comparison.
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