Contrasting ACI Worldwide (NASDAQ:ACIW) and Cadence Design Systems (NASDAQ:CDNS)

Cadence Design Systems (NASDAQ:CDNS) and ACI Worldwide (NASDAQ:ACIW) are both computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, risk, valuation and profitability.

Analyst Ratings

This is a summary of current recommendations for Cadence Design Systems and ACI Worldwide, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cadence Design Systems	0	3	13	1	2.88
ACI Worldwide	0	2	1	0	2.33

Cadence Design Systems currently has a consensus target price of $393.65, suggesting a potential upside of 19.25%. ACI Worldwide has a consensus target price of $64.00, suggesting a potential upside of 10.21%. Given Cadence Design Systems’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Cadence Design Systems is more favorable than ACI Worldwide.

Risk and Volatility

Cadence Design Systems has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500. Comparatively, ACI Worldwide has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Earnings and Valuation

This table compares Cadence Design Systems and ACI Worldwide”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cadence Design Systems	$5.30 billion	17.19	$1.11 billion	$4.29	76.95
ACI Worldwide	$1.76 billion	3.35	$226.66 million	$1.99	29.18

Cadence Design Systems has higher revenue and earnings than ACI Worldwide. ACI Worldwide 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 Cadence Design Systems and ACI Worldwide’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cadence Design Systems	21.18%	28.44%	15.30%
ACI Worldwide	11.51%	16.76%	7.89%

Insider & Institutional Ownership

84.8% of Cadence Design Systems shares are owned by institutional investors. Comparatively, 94.7% of ACI Worldwide shares are owned by institutional investors. 0.5% of Cadence Design Systems shares are owned by company insiders. Comparatively, 1.1% of ACI Worldwide shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Cadence Design Systems beats ACI Worldwide on 13 of the 15 factors compared between the two stocks.

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.

About ACI Worldwide

ACI Worldwide, Inc., a software company, develops, markets, installs, and supports a range of software products and solutions for facilitating digital payments in the United States and internationally. The company operates in three segments: Banks, Merchants, and Billers. The company offers ACI Acquiring, a solution to process credit, debit, and prepaid card transactions, deliver digital innovation, and fraud prevention; ACI Issuing, a digital payment issuing solution for new payment offering; and ACI Enterprise Payments Platform that provides payment processing and orchestration capabilities for digital payments. It also provides ACI Low Value Real-Time Payments, a platform for processing real-time payments; and ACI High Value Real-Time Payments, a payments engine that offers multi-bank, multi-currency, 24×7 payment processing, and SWIFT messaging. In addition, the company offers ACI Payments Orchestration Platform for optimizing payments; omni-channel payment platform; ACI Fraud Management, a real-time approach to fraud management; and ACI Speedpay, an integrated suite of digital billing, payment, disbursement, and communication services. The company offers electronic bill presentment and payment services to consumer finance, insurance, healthcare, higher education, utility, government, telecommunications, and mortgage sectors; implementation services, include product installations and configurations, and custom software modifications; and business and technical consultancy, on-site support, product education, and testing services, as well as distributes or acts as a sales agent for software developed by third parties. It markets its products under the ACI Worldwide brand. The company was formerly known as Transaction Systems Architects, Inc. and changed its name to ACI Worldwide, Inc. in July 2007. The company was founded in 1975 and is based in Elkhorn, Nebraska.