10Y annualized return is
excellent
at 25.6% per year
SNPS has met or exceeded earnings expectations in
all
recent quarters (2/2)
Strong Return on Equity
Strong Profit Margins
Excellent Liquidity Ratios
Low Debt Levels
🏆 Strong Market Position
🔒 Resilient Business Model
🚀 Strong AI and Technology Adoption
🌍 Expanding Global Opportunities
High Price-to-Earnings Ratio
High Price-to-Sales Ratio
⚠️ Challenges in Certain Markets
📉 Decline in Non-AI Segments
🔄 Uncertainty in China Market
🕰️ Potential Delays in Product Demand
Synopsys demonstrates strong business quality characterized by a resilient model and market leadership, though it faces challenges in certain segments and in China. Future prospects appear promising due to AI adoption and expanding opportunities, but uncertainties remain regarding the Chinese market and potential delays in product demand.
Analysis Date: February 26, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Synopsys, Inc. is a company that makes software tools to help engineers design and test electronic devices, like smartphones and computers. They provide solutions that allow companies to create the tiny circuits that power these devices and ensure they work correctly. Additionally, Synopsys offers services to help identify and fix security issues in software. Overall, they support businesses in various industries, like electronics and automotive, by making the design process easier and safer.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Latest News
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Synopsys (SNPS) concluded the recent trading session at $421.88, signifying a +0.16% move from its prior day's close.
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$170.81
Current Market Price: $388.66
IV/P Ratio: 0.44x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-128.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for SNPS
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (28.40)
P/B ratio ≤ 1.5 (6.44)
Current ratio ≥ 2.0 (2.68x)
Long-term debt < Net current assets (0.14x)
Margin of safety (-128.0%)
SNPS does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
25.45%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
78.86%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
34.74%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
SNPS boasts a gross profit margin of 78.86% and a net profit margin of 34.74%, indicating effective cost management and strong profitability.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.07x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q1 2025
Current Ratio
Current assets divided by current liabilities
2.68x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q1 2025
With a current ratio of 2.68 and a quick ratio of 2.51, SNPS demonstrates strong liquidity, indicating that it can easily meet its short-term obligations.
The debt-to-equity ratio of 0.071 and debt-to-assets ratio of 0.051 reflect a very low level of debt, indicating a strong balance sheet and low financial risk.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Synopsys maintains a leadership position in hardware-assisted verification and design automation, with significant customer engagement from major companies like AMD, ARM, and NVIDIA. The sale of new HAPS 200 and ZeBu 200 systems indicates continued innovation and customer trust.
The company has a stable and resilient business model supported by mission-critical products that are essential for customer innovation. This stability is reflected in their reaffirmed full-year 2025 targets for revenue and earnings.
While AI and HPC markets are strong, other segments like industrial, automotive, and consumer electronics are struggling, indicating potential risks in revenue diversification.
The company acknowledged a year-over-year revenue decline of 4%, raising concerns about the sustainability of growth outside AI-driven sectors.
The acquisition of ANSYS and the development of AI-driven design solutions position Synopsys well to capitalize on the growing demand for advanced chip design and verification tools, especially as companies transition to AI technologies.
Despite challenges in China, Synopsys has strong opportunities in other regions and segments, particularly among system companies that are increasing their R&D investments.
The anticipated deceleration in the Chinese market, which is expected to be below corporate average growth, poses a risk to overall revenue growth.
With new hardware solutions launched, there is a risk of demand air pockets as customers wait for upgraded products, which could impact short-term revenue.