Cadence Design Systems (NASDAQ: CDNS) and SS&C Technologies (NASDAQ:SSNC) are both mid-cap computer and technology companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Cadence Design Systems and SS&C Technologies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cadence Design Systems 0 3 3 0 2.50
SS&C Technologies 0 2 6 2 3.00

Cadence Design Systems presently has a consensus price target of $43.33, suggesting a potential downside of 0.98%. SS&C Technologies has a consensus price target of $43.33, suggesting a potential upside of 6.11%. Given SS&C Technologies’ stronger consensus rating and higher possible upside, analysts plainly believe SS&C Technologies is more favorable than Cadence Design Systems.

Volatility and Risk

Cadence Design Systems has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, SS&C Technologies has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Profitability

This table compares Cadence Design Systems and SS&C Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cadence Design Systems 13.45% 29.00% 11.60%
SS&C Technologies 15.36% 10.46% 4.59%

Dividends

SS&C Technologies pays an annual dividend of $0.28 per share and has a dividend yield of 0.7%. Cadence Design Systems does not pay a dividend. SS&C Technologies pays out 26.7% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Cadence Design Systems and SS&C Technologies’ 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 $1.82 billion 6.80 $203.08 million $0.93 47.05
SS&C Technologies $1.48 billion 5.68 $130.99 million $1.05 38.90

Cadence Design Systems has higher revenue and earnings than SS&C Technologies. SS&C Technologies 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.

Insider and Institutional Ownership

84.6% of Cadence Design Systems shares are held by institutional investors. Comparatively, 86.1% of SS&C Technologies shares are held by institutional investors. 2.6% of Cadence Design Systems shares are held by insiders. Comparatively, 17.6% of SS&C Technologies shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

SS&C Technologies beats Cadence Design Systems on 10 of the 17 factors compared between the two stocks.

Cadence Design Systems Company Profile

Cadence Design Systems, Inc. provides solutions that enable its customers to design electronic products. The Company’s product categories include Functional Verification, Digital integrated circuits (IC) Design and Signoff, Custom IC Design and Verification, System Interconnect and Analysis, and intellectual property (IP). Functional verification products are used to verify that the circuitry or the software designed will perform as intended. Digital IC design offerings are used to create representations of a digital circuit or an IC that can be verified for correctness prior to implementation. Custom IC design and verification offerings are used to create schematic and physical representations of circuits down to the transistor level for analog and memory designs. System Interconnect and Analysis offerings are used to develop printed circuit boards and IC packages. Design IP offerings consist of functional blocks, which customers integrate into their ICs for the development process.

SS&C Technologies Company Profile

SS&C Technologies Holdings, Inc. is a holding company. The Company is a provider of software products and software-enabled services that allow financial services providers to automate complex business processes and manage their information processing requirements. The Company’s portfolio of software products and software-enabled services allows its clients to automate and integrate front-office functions, such as trading and modeling, middle-office functions, such as portfolio management and reporting, and back-office functions, such as accounting, performance measurement, reconciliation, reporting, processing and clearing. The Company provides its solutions across the globe to over 11,000 clients, principally within the institutional asset and wealth management, alternative investment management, financial advisory and financial institutions vertical markets. Its portfolio includes over 90 products and software-enabled services.

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