SNPS Slides 31% In A Single Week, Wait For A Dip To Buy The Stock

We believe there is not much to fear in SNPS stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $67 Bil in market cap, Synopsys provides electronic design automation software and intellectual property solutions for integrated circuits, supporting technologies like USB, PCI Express, Ethernet, HDMI, and Bluetooth low energy.

[1] Valuation Looks Very High

This table highlights how SNPS is valued vs broader market. For more details see: SNPS Valuation Ratios

[2] Growth Is Moderate

• Synopsys has seen its top line grow at an average rate of 9.7% over the last 3 years
• Its revenues have grown 8.0% from $6.0 Bil to $6.4 Bil in the last 12 months
• Also, its quarterly revenues grew 14.0% to $1.7 Bil in the most recent quarter from $1.5 Bil a year ago.

This table highlights how SNPS is growing vs broader market. For more details see: SNPS Revenue Comparison

[3] Profitability Appears Strong

• SNPS last 12 month operating income was $1.1 Bil representing operating margin of 17.2%
• With cash flow margin of 22.4%, it generated nearly $1.4 Bil in operating cash flow over this period
• For the same period, SNPS generated nearly $2.0 Bil in net income, suggesting net margin of about 31.0%

This table highlights how SNPS profitability vs broader market. For more details see: SNPS Operating Income Comparison

[4] Financial Stability Looks Strong

• SNPS Debt was $15 Bil at the end of the most recent quarter, while its current Market Cap is $67 Bil. This implies Debt-to-Equity Ratio of 22.5%
• SNPS Cash (including cash equivalents) makes up $2.6 Bil of $48 Bil in total Assets. This yields a Cash-to-Assets Ratio of 5.4%

[4] Downturn Resilience Is Strong

SNPS has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• SNPS stock fell 30.6% from a high of $375.59 on 27 December 2021 to $260.83 on 11 May 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 10 August 2022
• Since then, the stock increased to a high of $645.35 on 30 July 2025 , and currently trades at $419.20

 
2020 Covid Pandemic

• SNPS stock fell 34.3% from a high of $164.99 on 19 February 2020 to $108.48 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 20 May 2020

 
2008 Global Financial Crisis

• SNPS stock fell 49.1% from a high of $28.64 on 17 October 2007 to $14.59 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 9 February 2011

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