Critical Review: Cadence Design Systems (NASDAQ:CDNS) & Verint Systems (NASDAQ:VRNT)

Cadence Design Systems (NASDAQ:CDNS) and Verint Systems (NASDAQ:VRNT) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Profitability

This table compares Cadence Design Systems and Verint Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cadence Design Systems	20.35%	30.13%	15.97%
Verint Systems	6.87%	11.06%	4.37%

Valuation and Earnings

This table compares Cadence Design Systems and Verint Systems”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cadence Design Systems	$4.64 billion	18.47	$1.06 billion	$3.88	81.16
Verint Systems	$893.84 million	1.39	$82.27 million	$0.71	28.89

Cadence Design Systems has higher revenue and earnings than Verint Systems. Verint Systems is trading at a lower price-to-earnings ratio than Cadence Design Systems, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Cadence Design Systems and Verint Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cadence Design Systems	0	4	15	0	2.79
Verint Systems	1	6	1	0	2.00

Cadence Design Systems currently has a consensus price target of $379.11, indicating a potential upside of 20.39%. Verint Systems has a consensus price target of $24.80, indicating a potential upside of 20.92%. Given Verint Systems’ higher possible upside, analysts clearly believe Verint Systems is more favorable than Cadence Design Systems.

Insider and Institutional Ownership

84.9% of Cadence Design Systems shares are held by institutional investors. Comparatively, 94.9% of Verint Systems shares are held by institutional investors. 2.0% of Cadence Design Systems shares are held by company insiders. Comparatively, 1.3% of Verint Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Cadence Design Systems has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500. Comparatively, Verint Systems has a beta of 1.52, meaning that its share price is 52% more volatile than the S&P 500.

Summary

Cadence Design Systems beats Verint Systems on 11 of the 14 factors compared between the two stocks.

About Cadence Design Systems

Cadence Design Systems, Inc. provides software, hardware, services, and reusable integrated circuit (IC) design blocks worldwide. The company offers functional verification services, including emulation and prototyping hardware. Its functional verification offering consists of JasperGold, a formal verification platform; Xcelium, a parallel logic simulation platform; Palladium, an enterprise emulation platform; and Protium, a prototyping platform for chip verification. The company also provides digital IC design and sign off products, including Genus synthesis and Joules RTL power solutions, as well as Modus DFT software solution to reduce systems-on-chip design-for-test time; physical implementation tools, such as place and route, optimization, and multiple patterning preparation; and Innovus implementation system, a physical implementation system. In addition, it offers custom IC design and simulation products to create schematic and physical representations of circuits down to the transistor level for analog, mixed-signal, custom digital, memory, and radio frequency designs; and system design and analysis products to develop printed circuit boards and IC packages, as well as to analyze electromagnetic, electro-thermal, and other multi-physics effects. Further, the company provides intellectual property (IP) products comprising pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP with memory models to emulate and model the expected behavior and interaction of standard industry system interface protocols. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. The company serves consumer, hyperscale computing, 5G communications, mobile, automotive, aerospace and defense, industrial, and life science industries. Cadence Design Systems, Inc. was incorporated in 1987 and is headquartered in San Jose, California.

About Verint Systems

Verint Systems Inc. provides customer engagement solutions worldwide. It offers forecasting and scheduling, channels and routing, knowledge management, fraud and security solutions, quality and compliance, analytics and insights, real-time assistance, self-services, financial compliance, and voice pf the consumer solutions. The company provides Verint Open platform designed to help brands increase CX automation across all touchpoints between organization and customers in the contact center, back office, branch, web sites, and mobile apps. It serves banking, insurance, public, retail, and telecommunication industries. Verint Systems Inc. was incorporated in 1994 and is headquartered in Melville, New York.