Cadence Design Systems, Inc. (CDNS) vs Salesforce, Inc. (CRM): Which Is the Better Buy in 2026?
As of 2026-06-21, CDNS is overvalued at $387, with a DCF intrinsic value of $165 and a margin of safety of -135%. CRM is undervalued at $152, with an intrinsic value of $271 and a margin of safety of 44%. Of the two, CRM has the wider margin of safety.
Rewards
- ★Cadence Design Systems, Inc. has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
- ★Gross margin of 86.1% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Cadence Design Systems, Inc. scores 91/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
- ★Gross margin of 77.6% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Free cash flow has grown at a 31.6% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Each dollar of retained earnings has created $5.53 of earning power — management is an exceptional capital allocator.
Risks
- ⚠FCF yield of 1.4% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠Trailing P/E of 90.1x is 31% above the historical average of 68.9x — the stock trades at a premium to its own history.
- ⚠PEG ratio of 3.68 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $387?
The market implies +28.4% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +25.3%, reflecting heavy growth investment.
What growth rate is the market pricing in at $152?
The market implies +3.6% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding -2.8%, reflecting heavy growth investment expected to generate future returns.
Economic Moat Score
Learn more →Wide moat with strength across all dimensions. Revenue Predictability is the standout factor.
Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency would strengthen the moat.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Mr. Market is panicking — potential buying opportunity if fundamentals are strong"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: CDNS vs CRM
Is Cadence Design Systems, Inc. or Salesforce, Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, CRM trades at a 43.9% margin of safety (intrinsic value $271 vs. price $152), compared to CDNS's -135.1% margin of safety (intrinsic $165 vs. $387).
Which stock has a wider economic moat, Cadence Design Systems, Inc. or Salesforce, Inc.?▼
CDNS scores 91/100 (Wide moat), while CRM scores 58/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Salesforce, Inc. in financial distress?▼
CRM's Altman Z-Score of 2.4 places it in the Grey zone, signaling elevated bankruptcy risk. CDNS scores 13.3 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Cadence Design Systems, Inc. or Salesforce, Inc.?▼
Salesforce, Inc. (CRM) generates a 13.3% free cash flow yield, compared to Cadence Design Systems, Inc.'s 1.4%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Cadence Design Systems, Inc. or Salesforce, Inc.?▼
CDNS earns 13.4% ROIC versus CRM's 9.6%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.