Should You Pick Synopsys Stock Over Its Peers?
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Synopsys (SNPS) trades at 82.9 times earnings, the highest multiple among its five-company peer group. The software maker grew sales faster than any of the other four over its latest four fiscal quarters, yet it kept the smallest share of those sales as operating profit. Much of that lead comes from buying Ansys, which brought in about $711 million of fiscal Q3 revenue. Cadence Design Systems carries a nearly identical market value and offers the sharpest contrast. How far apart are Synopsys and Cadence on growth, profit and price?
Synopsys Grows Faster Than Cadence But Keeps Less Profit
Synopsys grew revenue 46.3% over the four fiscal quarters ended July 31, 2026, compared with 17.6% for Cadence over its four quarters ended September 30. Cadence kept 29.6% of its sales as operating profit, while Synopsys kept 11.0%. You pay less for each dollar of profit at Cadence, which trades at 65.3 times earnings.
The rest of the group lines up the same way. Fortinet, Keysight Technologies and Open Text each trade at a lower multiple than Synopsys, grew more slowly and earned a wider operating margin. Synopsys therefore has the highest P/E and the fastest sales growth of the five, and the lowest operating margin.
| SNPS | CDNS | KEYS | OTEX | FTNT | |
|---|---|---|---|---|---|
| Four Fiscal Quarters | ended 2026-07-31 (Q4 FY2025 to Q3 FY2026) | ended 2026-09-30 (Q4 FY2025 to Q3 FY2026) | ended 2026-07-31 (Q4 FY2025 to Q3 FY2026) | ended 2026-06-30 (Q1 FY2026 to Q4 FY2026) | ended 2026-09-30 (Q4 FY2025 to Q3 FY2026) |
| Market Value (USD billion) | 89.3 | 90.2 | 51.1 | 6.43 | 92.7 |
| P/E | 82.9 | 65.3 | 40.6 | 10 | 40.6 |
| Revenue Growth | 46.3% | 17.6% | 25.5% | 1.5% | 20.2% |
| Operating Margin | 11% | 29.6% | 20.3% | 23.2% | 33% |
| Total Return, Incl. Dividends, 2025-10-30 to 2026-11-02 | 5.2% | -2% | 70.5% | -27% | 49.9% |
Synopsys Added Ansys While Its Margin Fell
Synopsys sells chip design software through its Design Automation business and licenses chip designs to customers through Design IP. Management said on the August 26, 2026 call that fiscal Q3 2026 revenue reached $2.477 billion, up about 42%. Ansys, which Synopsys combined with a year earlier, added to that growth, while the businesses Synopsys already owned grew more slowly. Within Design Automation, management said EDA chip design software revenue rose 8.5%, and Design IP revenue increased about 11%.
The growth lead therefore comes in large part from adding Ansys, while profit on each dollar of sales has thinned. Synopsys’s twelve-month operating margin fell from 24.6% in the four quarters to July 2024 to 17.2% a year later. It fell again in the four quarters to July 2026, hitting its second-lowest level in ten years of quarter ends. The lowest, 9.7%, came one quarter earlier, in the four quarters to April 2026. Management said even the fiscal Q3 2026 earnings behind the P/E included a gain from selling its processor IP business.
What Synopsys Expects From Its Fiscal Fourth Quarter
Synopsys expects fiscal Q4 2026 revenue of $2.53 billion to $2.58 billion, exceeding what it reported for fiscal Q3. Management also expects double-digit growth in EDA revenue, not counting acquisitions, for the quarter and for fiscal 2026.
In fiscal Q3 2026 alone, Synopsys kept 14.5% of sales as operating profit, up from 9.5% in fiscal Q3 2025. The reported profit still falls far below the company’s adjusted figure. For fiscal Q4, Synopsys guided reported earnings of $0.60 to $0.85 a share, compared with $4.10 to $4.16 on its adjusted measure. Management also expects higher restructuring charges for fiscal 2026 as it speeds up the cost savings promised from combining with Ansys.
The stock price appears to assume Synopsys keeps growing fastest in the group while its reported margin climbs toward those of its peers. So far, Synopsys has shown that in a single quarter, while its twelve-month margin remains the lowest of the five. At its September 30, 2026 Investor Day, Synopsys guided fiscal 2027 revenue as high as $11.2 billion. Its fiscal Q4 revenue guide is about 12% to 15% above the $2.25 billion it reported in fiscal Q4 2025, well below fiscal Q3’s 42% growth. Synopsys is expected to report its fiscal fourth quarter in December 2026, and its operating margin over the latest twelve months is the figure to watch. On today’s figures, each peer offers a wider margin at a lower P/E, so Synopsys suits investors who expect its margin to keep recovering.
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