ADP vs Cadence
ADP and Cadence Design Systems Inc. are compared here to illuminate their business models, financial performance, and market context. This page provides a neutral overview of how each company operates, where revenue comes from, and how they position themselves within their industries. Educational content, not financial advice.
ADP and Cadence Design Systems Inc. are compared here to illuminate their business models, financial performance, and market context. This page provides a neutral overview of how each company operates...
Why It's Moving
ADP boosts dividend for 51st straight year, embedding new healthcare tools for small businesses.
- Dividend jumps 10% from $1.54, yielding 2.6% annualized with a sustainable 60.81% payout ratio, backed by 12% average EPS growth over five years.
- Seamless Thatch integration automates ICHRA quoting, enrollment, and payroll deductions in RUN, easing healthcare access for small firms.
- Recent employment data shows 32,000 private jobs shed in November, with small businesses hit hardest, yet ADP's platforms position it to support clients navigating labor slowdowns.
Cadence Design Systems powers ahead with record backlog and raised 2025 outlook after stellar Q3 results.
- Q3 billings hit $1.36 billion with 21.8% average YoY growth over recent quarters, highlighting robust customer demand and enhanced liquidity for expansion.
- Earnings crushed estimates at $1.93 per share on $1.34 billion revenue, up 10.1% YoY, with a swift 7.7-month customer acquisition cost payback showcasing product strength.
- Needham analyst upheld Buy rating with $390 target, while stock climbed 2.3% to $337 amid positive analyst updates and market alignment.
ADP boosts dividend for 51st straight year, embedding new healthcare tools for small businesses.
- Dividend jumps 10% from $1.54, yielding 2.6% annualized with a sustainable 60.81% payout ratio, backed by 12% average EPS growth over five years.
- Seamless Thatch integration automates ICHRA quoting, enrollment, and payroll deductions in RUN, easing healthcare access for small firms.
- Recent employment data shows 32,000 private jobs shed in November, with small businesses hit hardest, yet ADP's platforms position it to support clients navigating labor slowdowns.
Cadence Design Systems powers ahead with record backlog and raised 2025 outlook after stellar Q3 results.
- Q3 billings hit $1.36 billion with 21.8% average YoY growth over recent quarters, highlighting robust customer demand and enhanced liquidity for expansion.
- Earnings crushed estimates at $1.93 per share on $1.34 billion revenue, up 10.1% YoY, with a swift 7.7-month customer acquisition cost payback showcasing product strength.
- Needham analyst upheld Buy rating with $390 target, while stock climbed 2.3% to $337 amid positive analyst updates and market alignment.
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Explore BasketInvestment Analysis
ADP
ADP
Pros
- ADP's 2025 revenue rose 7.07% to $20.56 billion, reflecting solid top-line growth in its human capital management business.
- The company has a strong market presence as a global leader in HR technology and business process outsourcing with a large, diverse client base.
- ADP's valuation metrics indicate it is undervalued on a forward PE ratio basis compared to historical averages and industry peers.
Considerations
- ADP's stock price declined about 10% in 2025 amid broad tech volatility and sector rotation, indicating some investor caution or market headwinds.
- The forward free cash flow yield is significantly lower than its 3- and 5-year averages, suggesting weaker cash generation or capital efficiency recently.
- Analyst consensus is a 'Hold' rating with a moderate average price target upside, indicating tempered growth expectations and lack of strong buy signals.
Cadence
CDNS
Pros
- Cadence Design Systems is a major player in electronic design automation, benefiting from increased demand in semiconductor and tech industries.
- The company has strong recurring revenue streams and benefits from multi-year design wins with leading chip manufacturers.
- Cadence’s focus on AI-driven design tools positions it well in growing markets such as AI, automotive, and 5G technology.
Considerations
- Cadence faces intense competition from other design automation providers, which could pressure pricing and margins.
- Its business is sensitive to cyclicality in semiconductor capital expenditures and broader tech spending cycles.
- Execution risks persist given the complexity of innovation-driven growth and rapid technology changes in its core markets.
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