Head-To-Head Contrast: Cadence Design Systems (NASDAQ:CDNS) & Salesforce (NYSE:CRM)

Salesforce (NYSE:CRM) and Cadence Design Systems (NASDAQ:CDNS) are both large-cap computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Risk and Volatility

Salesforce has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, Cadence Design Systems has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Salesforce and Cadence Design Systems, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Salesforce	1	12	29	1	2.70
Cadence Design Systems	0	4	13	0	2.76

Salesforce currently has a consensus target price of $323.57, indicating a potential upside of 74.53%. Cadence Design Systems has a consensus target price of $379.59, indicating a potential upside of 31.65%. Given Salesforce’s higher probable upside, equities analysts clearly believe Salesforce is more favorable than Cadence Design Systems.

Profitability

This table compares Salesforce and Cadence Design Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Salesforce	17.91%	14.41%	8.89%
Cadence Design Systems	20.35%	30.13%	15.97%

Institutional and Insider Ownership

80.4% of Salesforce shares are held by institutional investors. Comparatively, 84.9% of Cadence Design Systems shares are held by institutional investors. 3.0% of Salesforce shares are held by company insiders. Comparatively, 2.0% of Cadence Design Systems shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Salesforce and Cadence Design Systems”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Salesforce	$40.32 billion	4.31	$6.20 billion	$7.49	24.75
Cadence Design Systems	$4.64 billion	16.91	$1.06 billion	$3.88	74.31

Salesforce has higher revenue and earnings than Cadence Design Systems. Salesforce 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.

Summary

Salesforce beats Cadence Design Systems on 8 of the 15 factors compared between the two stocks.

About Salesforce

Salesforce, Inc. provides Customer Relationship Management (CRM) technology that brings companies and customers together worldwide. The company's service includes sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and artificial intelligence, and deliver quotes, contracts, and invoices; and service that enables companies to deliver trusted and highly personalized customer support at scale. In addition, its platform offering comprise a flexible platform that enables companies of various sizes, locations, and industries to build business workflow and apps with customer; online learning platform that allows anyone to learn in-demand Salesforce skills; and Slack, an intelligent productivity platform. The company's marketing services enables companies to plan, personalize, automate, and optimize customer marketing journey, connecting interaction, and connected products; and commerce services, which empowers shopping experience across various customer touchpoint, such as mobile, web, social, and stores and provides click-to-code tools that offers customers to build and deploy solutions. Further, its analytics offering includes Tableau, an end-to-end analytics solution for range of enterprise use cases and intelligent analytics with AI models, spot trends, predict outcomes, creates summaries, timely recommendations, and take action from any device; and integration service including MuleSoft, which provides building blocks to deliver end-to-end and connected experiences. Additionally, the company provides data cloud, a hyperscale data engine native to Salesforce; vertical services to meet the needs of customers in industries, such as financial services, healthcare and life sciences, manufacturing and automotive and government; and offers salesforce starter for small and medium-sized businesses. Salesforce, Inc. was incorporated in 1999 and is headquartered in San Francisco, California.

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.