Critical Review: Cadence Design Systems (NASDAQ:CDNS) & PowerFleet (NASDAQ:AIOT)

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PowerFleet	$443.78 million	0.82	-$20.55 million	($0.14)	-19.29
Cadence Design Systems	$5.84 billion	16.65	$1.11 billion	$5.03	70.15

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

Volatility and Risk

PowerFleet has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Cadence Design Systems has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PowerFleet	-4.16%	0.48%	0.24%
Cadence Design Systems	23.60%	27.98%	15.35%

Insider & Institutional Ownership

73.4% of PowerFleet shares are owned by institutional investors. Comparatively, 84.8% of Cadence Design Systems shares are owned by institutional investors. 5.9% of PowerFleet shares are owned by insiders. Comparatively, 0.5% of Cadence Design Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for PowerFleet and Cadence Design Systems, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PowerFleet	2	1	3	0	2.17
Cadence Design Systems	0	3	18	1	2.91

PowerFleet currently has a consensus target price of $7.40, indicating a potential upside of 174.07%. Cadence Design Systems has a consensus target price of $404.14, indicating a potential upside of 14.54%. Given PowerFleet’s higher possible upside, research analysts plainly believe PowerFleet is more favorable than Cadence Design Systems.

Summary

Cadence Design Systems beats PowerFleet on 12 of the 15 factors compared between the two stocks.

About PowerFleet

PowerFleet, Inc. engages in the provision of fleet management solutions for logistics, industrial, and vehicles. It offers wireless Internet of Things and machine to machine solutions for securing, controlling, tracking, and managing enterprise assets such as industrial trucks, tractor trailers, containers, cargo, and vehicle and truck fleets. It operates through the following geographical segments: United States, Israel, and Other. The company was founded in 1993 and is headquartered in Woodcliff Lake, NJ.

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.