What Gave Agilysys Stock Its Edge Over Cadence?
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Two application software companies grew their sales at about the same pace over the last three years. Over five years to November 2026, one stock gained 150.7% and the other 86.9%. The bigger gain belongs to Agilysys (AGYS), and the smaller one goes to Cadence Design Systems (CDNS). Take a guess: did Agilysys get there on faster sales, bigger profits, or investors paying more for its shares?
Which Similar Company Has Beaten Cadence Over Five Years?
Cadence has performed well against most of its industry. Over five years to November 2026, its stock posted a higher return than 93.6% of the 125 application software companies compared. Yet among companies worth at least $2 billion whose sales grew like Cadence’s, one beat it by 20 points or more. The stock of Agilysys finished 63.8 points ahead.
| Company | Sales growth, 3-year average | P/E | 1-year | 3-year | 5-year |
|---|---|---|---|---|---|
| Cadence Design Systems (CDNS) | 16.1% | 65.8x | 0.8% | 26.8% | 86.9% |
| Agilysys (AGYS) | 16.6% | 78.8x | -2.4% | 43.0% | 150.7% |
Total return to 2026-11-10, including dividends. Companies in Application Software worth at least $2 billion whose sales grew within 4 points of CDNS’s and whose stock beat it by at least 20 points over five years. P/E: latest close over the last four quarters’ earnings per share.
Both stocks rose in a group where most shares fell. The median application software stock lost 54.8% over those five years. That makes Agilysys, not the broader industry, the fair yardstick for Cadence.
Did Agilysys Grow Faster Than Cadence?
Over the last three years, only slightly: the two companies’ average yearly sales growth was 0.5 points apart. Over five years, Agilysys’s sales did grow faster, rising 130.2% in the four quarters to September 2026 against the same four quarters five years earlier, compared with 106.1% for Cadence, which on its own would have widened the gap between the two stocks.
The two companies sell to very different customers. Agilysys provides hardware and software to the hospitality industry, such as point of sale and property management systems for hotels, resorts and restaurants. Cadence sells tools for designing chips. Its largest business, Core Electronic Design Automation (EDA), brought in 70% of its 2025 revenue.
Where Did The Gap Come From?
Not from the two businesses alone. Agilysys went from an operating loss in 2021 to an operating margin of 14.3% in 2026. Cadence was profitable in both years, and its profit per share rose 102.8%, about as fast as its sales. Cadence’s operating margin widened by just 3.5 points.
Because Agilysys had no profit in 2021, the two compare on price to sales rather than earnings. Between September 2021 and September 2026, investors paid 7.3% less for each dollar of Agilysys’s sales and 6.0% more for each dollar of Cadence’s. That more than offset Agilysys’s faster sales growth through September 2026. Most of the gap opened after that, as investors paid more for its earnings: Agilysys’s price-to-earnings rose from 61.6 on September 30, 2026 to 78.8 by November 10.
Cadence’s operating margin in our standardized filings data has slipped over the past year, to 28.8% in fiscal Q3 2026 from 33.8% a year earlier. That came in a quarter when Cadence’s sales rose 22.0%, so the company kept less of each new dollar. On its October 26 call, management put the quarter’s GAAP operating margin lower, at 26.2%, the basis of its guidance.
What To Watch In Cadence’s Next Report
Management now expects a slightly higher margin than it did three months ago. On October 26, it raised its forecast for Cadence’s 2026 GAAP operating margin to 28.7% at the midpoint, up from 28.2% in its July release. For the fourth quarter alone, management guided to a GAAP operating margin of 30.0% to 31.0%.
When Cadence releases its fiscal Q4 2026 report, expected in February 2027, its operating margin will be the figure to watch.
How To Act On CDNS?
Not necessarily on Cadence Design Systems alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. Here is one company from Cadence Design Systems’ own industry that has beaten it. Over the five years to November 2026, Agilysys stock rose 150.7%, while Cadence Design Systems stock rose 86.9%.
Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.
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