The shares of Cadence Design Systems, Inc. (NASDAQ:CDNS) and Intuit Inc. (NASDAQ:INTU) were among the active stocks of the last trading sessions. Cadence Design Systems, Inc. (NASDAQ:CDNS) declined to -0.89% closing at the price of $39.13 whereas the shares of Intuit Inc. (NASDAQ:INTU) declined -1.83% with the decrease of -3.75 points closing at the price of $200.69. Cadence Design Systems, Inc. has currently increase 4.91% in its stock over the period of 6-months while its rival Intuit Inc. added 16.69% in the previous 6-months.
Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.
Returns and Profitability
Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.
The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Cadence Design Systems, Inc. (NASDAQ:CDNS) is 6.8% while the ROI of Intuit Inc. (NASDAQ:INTU) is 44.7%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, CDNS’s EBITDA Margin is 24.7 whereas INTU’s is 32.41.
Both the profitability ratios suggest that Intuit Inc. (NASDAQ:INTU) is more suitable investment in terms of profitability and return.
EPS & Surprise Factor
Cadence Design Systems, Inc. (NASDAQ:CDNS) reported $0.45/share EPS for the previous quarter where analysts were predicting an EPS to be $0.4/share Thus beating the analyst Estimates with a Surprise Factor of 12.5 Percent. While, Intuit Inc. (NASDAQ:INTU) reported EPS of $0.32/share in the last quarter. The analysts projected EPS of $0.23/share depicting a Surprise of 39.1 Percent.
Taking a look at Earnings per Share, Intuit Inc. tends to be beating the analyst estimates more than Cadence Design Systems, Inc.. so INTU is more profitable than CDNS.
Technical Analysis of Cadence Design Systems, Inc. & Intuit Inc.
Moving average convergence divergence (MACD) shows that Cadence Design Systems, Inc. (NASDAQ:CDNS) is on a PRICE RELATIVITY trend While Intuit Inc. (NASDAQ:INTU) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Cadence Design Systems, Inc. was in BEARISH territory and Intuit Inc. was in BEARISH territory.
CDNS’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While INTU’s candle is BEARISH with HIGH.
EPS Growth Rate: CDNS’s 12% versus INTU’s 14.7%
Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Cadence Design Systems, Inc. (NASDAQ:CDNS) is predicted at 12% while Intuit Inc. (NASDAQ:INTU) stands at 14.7%. These numbers suggest that INTU is more suitable investment in terms of EPS growth rate.
Financial Risk and Liquidity Concerns
The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of CDNS stands at 1.3 while INTU is at 1.1 whereas the debt ratio of the prior is 0.54 while the debt ratio of the later is 0.19.
The values of the both ratios suggest that CDNS is more suitable investment when the liquidity and risk is the main concern.
While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2.2 for CDNS and 2.2 for INTU which means CDNS has Hold rating whereas INTU has Hold rating.
Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for CDNS is $52.5 which is 25.47% of its current price while INTU has price target of 224.93 which is 10.78% of its current price.
Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.
CDNS currently has price to earning P/E ratio of 93.84 whereas INTU has 41.94 while the forward P/E ratio for the prior stands at 21.22 and for the later it depicts the value of 27.44.
The price to Book P/B for CDNS is 9.02, Price to Sale is at 5.54 and for INTU these ratios stand at 21.81 and 8.8.