Secureworks (SCWX) vs. Cadence Design Systems (CDNS) Head to Head Comparison

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

Earnings and Valuation

This table compares Secureworks and Cadence Design Systems’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Secureworks $518.71 million 2.65 -$39.10 million ($0.16) -105.88
Cadence Design Systems $2.14 billion 8.51 $345.78 million $1.23 52.62

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

Risk and Volatility

Secureworks has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500. Comparatively, Cadence Design Systems has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Secureworks and Cadence Design Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Secureworks 3 5 0 0 1.63
Cadence Design Systems 0 5 5 0 2.50

Secureworks currently has a consensus price target of $14.25, indicating a potential downside of 15.88%. Cadence Design Systems has a consensus price target of $59.00, indicating a potential downside of 8.84%. Given Cadence Design Systems’ stronger consensus rating and higher possible upside, analysts clearly believe Cadence Design Systems is more favorable than Secureworks.

Profitability

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

Net Margins Return on Equity Return on Assets
Secureworks -7.54% -1.85% -1.27%
Cadence Design Systems 17.91% 30.86% 16.03%

Institutional and Insider Ownership

10.9% of Secureworks shares are owned by institutional investors. Comparatively, 86.9% of Cadence Design Systems shares are owned by institutional investors. 87.5% of Secureworks shares are owned by insiders. Comparatively, 2.3% of Cadence Design Systems shares are owned by 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 Secureworks on 13 of the 14 factors compared between the two stocks.

About Secureworks

SecureWorks Corp., a cybersecurity company, provides an integrated suite of intelligence-driven information security solutions focused on protecting organizations worldwide. The company's solutions include managed security, threat intelligence, security and risk consulting, and incident response. Its solutions enable organizations to fortify their cyber defenses to prevent security breaches, detect malicious activity, respond to security breaches, and predict emerging threats. The company serves clients in a range of industries, including the financial services, manufacturing, technology, retail, insurance, utility, and healthcare sectors. As of February 1, 2019, it served approximately 4,700 customers in 52 countries. The company was formerly known as SecureWorks Holding Corporation and changed its name to SecureWorks Corp. in November 2015. The company was founded in 1999 and is headquartered in Atlanta, Georgia. SecureWorks Corp. is a subsidiary of Dell Inc.

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 simulation platform; Palladium Z1, an enterprise emulation platform; and Protium S1 field-programmable gate array prototyping platform. The company also provides digital IC design products, such as logic design products for chip planning, design, verification, and test technologies and services; physical implementation tools, including place and route, signal integrity, optimization, and multiple patterning preparation; and signoff products to signoff the design as ready for manufacture by a silicon foundry, as well as design for manufacturing products for use in the product development process. 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 interconnect design products to develop printed circuit boards and IC packages. Further, the company provides design intellectual property (IP) products consisting of pre-verified and customizable functional blocks to integrate into customer's ICs; and verification IP and memory models for use in system-level verification to model correct behavior of full systems interacting with their environments. Additionally, it offers services related to methodology, education, and hosted design solutions, as well as technical support and maintenance services. Cadence Design Systems, Inc. was founded in 1988 and is headquartered in San Jose, California.

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