Financial Survey: Cadence Design Systems (NASDAQ:CDNS) versus The Descartes Systems Group (NASDAQ:DSGX)

The Descartes Systems Group (NASDAQ:DSGX) and Cadence Design Systems (NASDAQ:CDNS) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Analyst Ratings

This is a summary of recent ratings for The Descartes Systems Group and Cadence Design Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The Descartes Systems Group	0	5	6	1	2.67
Cadence Design Systems	0	4	15	0	2.79

The Descartes Systems Group currently has a consensus price target of $116.30, indicating a potential upside of 37.63%. Cadence Design Systems has a consensus price target of $379.11, indicating a potential upside of 25.86%. Given The Descartes Systems Group’s higher possible upside, research analysts plainly believe The Descartes Systems Group is more favorable than Cadence Design Systems.

Institutional & Insider Ownership

77.7% of The Descartes Systems Group shares are owned by institutional investors. Comparatively, 84.9% of Cadence Design Systems shares are owned by institutional investors. 0.3% of The Descartes Systems Group shares are owned by insiders. Comparatively, 0.4% of Cadence Design Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The Descartes Systems Group	$651.00 million	11.16	$143.27 million	$1.77	47.74
Cadence Design Systems	$4.64 billion	17.67	$1.06 billion	$3.88	77.63

Cadence Design Systems has higher revenue and earnings than The Descartes Systems Group. The Descartes Systems Group 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
The Descartes Systems Group	22.10%	10.57%	8.97%
Cadence Design Systems	20.35%	30.13%	15.97%

Volatility & Risk

The Descartes Systems Group has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Cadence Design Systems has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Summary

Cadence Design Systems beats The Descartes Systems Group on 12 of the 15 factors compared between the two stocks.

About The Descartes Systems Group

The Descartes Systems Group Inc. provides cloud-based logistics and supply chain management solutions worldwide. Its Logistics Technology platform offers a range of modular, interoperable web and wireless logistics management solutions. The company provides a suite of solutions that include routing, mobile, and telematics; transportation management; ecommerce, shipping, and fulfillment; customs and regulatory compliance; global trade intelligence; broker and forwarder enterprise systems; and B2B messaging and connectivity services. It also offers its customers to use its modular, software-as-a-service, and data solutions to route, schedule, track, and measure delivery resources; plan, allocate, and execute shipments; rate, audit, and pay transportation invoices; access and analyze global trade data; research and perform trade tariff and duty calculations; file customs and security documents for imports and exports; and various other logistics processes. In addition, the company provides consulting, implementation, and training services, as well as maintenance and support services. It serves transportation providers, such as air, ocean, and truck modes; logistics service providers, including third-party logistics providers, freight forwarders, and customs brokers; and distribution-intensive companies, such as manufacturers, retailers, distributors, and mobile business service providers through subscription, transactional or perpetual license basis. The Descartes Systems Group Inc. was incorporated in 1981 and is headquartered in Waterloo, Canada.

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.