Cadence Design Systems (NASDAQ: CDNS) and Black Knight Financial Services (NYSE:BKI) are both mid-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.
Volatility & Risk
Cadence Design Systems has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500. Comparatively, Black Knight Financial Services has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500.
Earnings & Valuation
This table compares Cadence Design Systems and Black Knight Financial Services’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Cadence Design Systems||$1.82 billion||6.85||$203.08 million||$0.93||47.36|
|Black Knight Financial Services||$1.03 billion||6.81||$45.80 million||$0.65||70.54|
Cadence Design Systems has higher revenue and earnings than Black Knight Financial Services. Cadence Design Systems is trading at a lower price-to-earnings ratio than Black Knight Financial Services, indicating that it is currently the more affordable of the two stocks.
This table compares Cadence Design Systems and Black Knight Financial Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Cadence Design Systems||13.45%||29.00%||11.60%|
|Black Knight Financial Services||4.31%||9.10%||4.53%|
Insider and Institutional Ownership
84.2% of Cadence Design Systems shares are held by institutional investors. Comparatively, 45.1% of Black Knight Financial Services shares are held by institutional investors. 2.6% of Cadence Design Systems shares are held by insiders. Comparatively, 30.8% of Black Knight Financial Services shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This is a summary of recent ratings and target prices for Cadence Design Systems and Black Knight Financial Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Cadence Design Systems||1||2||3||0||2.33|
|Black Knight Financial Services||0||1||3||0||2.75|
Cadence Design Systems presently has a consensus price target of $38.75, indicating a potential downside of 12.01%. Black Knight Financial Services has a consensus price target of $46.25, indicating a potential upside of 0.87%. Given Black Knight Financial Services’ stronger consensus rating and higher possible upside, analysts clearly believe Black Knight Financial Services is more favorable than Cadence Design Systems.
Cadence Design Systems beats Black Knight Financial Services on 10 of the 13 factors compared between the two stocks.
About Cadence Design Systems
Cadence Design Systems, Inc. provides solutions that enable its customers to design electronic products. The Company’s product categories include Functional Verification, Digital integrated circuits (IC) Design and Signoff, Custom IC Design and Verification, System Interconnect and Analysis, and intellectual property (IP). Functional verification products are used to verify that the circuitry or the software designed will perform as intended. Digital IC design offerings are used to create representations of a digital circuit or an IC that can be verified for correctness prior to implementation. Custom IC design and verification offerings are used to create schematic and physical representations of circuits down to the transistor level for analog and memory designs. System Interconnect and Analysis offerings are used to develop printed circuit boards and IC packages. Design IP offerings consist of functional blocks, which customers integrate into their ICs for the development process.
About Black Knight Financial Services
Black Knight, Inc. provides integrated technology, workflow automation, and data and analytics to the mortgage and real estate industries. The Company’s segments include Technology, and Data and Analytics. The Company’s Technology segment offers software and hosting solutions that support loan servicing, loan origination and settlement services. Its Data and Analytics segment offers data and analytics solutions to the mortgage, real estate and capital markets industries. These solutions include property ownership data, lien data, servicing data, automated valuation models, collateral risk scores, prepayment and default models, lead generation and other data solutions.
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