Synopsys Inc (SNPS, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $584.26, Synopsys Inc has witnessed a daily loss of 0.08%, marked against a three-month change of 6.23%. A thorough analysis, underlined by the GF Score, suggests that Synopsys Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
With a Financial strength rank of 9/10, a Profitability rank of 9/10, a perfect Growth rank of 10/10, a GF Value rank of 3/10, and a Momentum rank of 9/10, GuruFocus assigned Synopsys Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Synopsys Inc Business
Synopsys Inc, with a market cap of $89.13 billion and sales of $6.13 billion, is a leading provider of electronic design automation software, intellectual property, and software integrity products. The company's EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution. Synopsys Inc's SI business allows customers to continuously manage and test the code base for security and quality. The convergence of semiconductor companies moving up-stack toward systems-like companies, and systems companies moving down-stack toward in-house chip design, is expanding the EDA customer base and benefiting vendors like Synopsys Inc.
Financial Strength Breakdown
According to the Financial Strength rating, Synopsys Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Synopsys Inc stands impressively at 629.62, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 15.98, Synopsys Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. The favorable Debt-to-Revenue ratio of 0.11 solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank reflects Synopsys Inc's impressive standing among its peers in generating profit. The company's Operating Margin has increased to 23.04% in 2023 from 16.88% in 2019. Additionally, the Gross Margin has consistently risen over the past five years, reaching 79.08% in 2023. The Piotroski F-Score confirms Synopsys Inc's solid financial situation, and its strong Predictability Rank of 3.5 stars out of five underscores its consistent operational performance.
Growth Rank Breakdown
Ranked highly in Growth, Synopsys Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 16.7%, outperforming 68.14% of companies in the Software industry. The three-year EBITDA growth rate of 22.2 and a five-year rate of 20.8 highlight the company's capability to drive growth.
Conclusion: Synopsys Inc's Position for Outperformance
Considering Synopsys Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. The company's strategic management, consistent operational performance, and commitment to growth are key indicators of its ability to maintain a competitive edge in the market. Investors looking for similar opportunities can explore more companies with strong GF Scores using the GF Score Screen provided by GuruFocus.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
