Signal Ledger LabSignal Ledger valuation · SNPS
Synopsys Inc
What the shares are worth today on our research (management’s own targets for each business): every line valued at the end of FY2030, net debt rolled forward, then discounted back to Jul 31, 2026.
- Business value at FY2030
- $83B
- FY2030 revenue
- $17B
- FY2030 EPS · P/E
- $19.55 · 23×
- Discount rate (WACC · equity)
- 8.97% · 9.57%
Latest quarter in this research: Q3 FY2026
Reported Aug 26, 2026 for the quarter to Jul 31, 2026 (company release ↗). This valuation already reflects these results (researched Oct 23, 2026).
| Segment | Revenue | vs a year ago | Operating income | Margin |
|---|---|---|---|---|
| Design Automation (EDA and Ansys) | $2.00B | +53% | $0.91B | 45.2% |
| Design IP | $0.47B | +11% | $0.13B | 26.5% |
- Revenue increased to $2.477B after Ansys integration; Design IP returned to positive YoY growth.
- Reported segment profits are adjusted measures excluding company-level expenses; total $1.0304B reconciles to $0.3575B GAAP operating profit.
- Full-year FY2026 revenue midpoint raised to $9.715B; quarter GAAP EPS was $2.84.
What each business is worth
| Business | Model | FY2030 revenue | Value today | Per share | 2030 multiple | Value from beyond FY2030 |
|---|---|---|---|---|---|---|
| Design Automation (EDA and Ansys) | Margin | $13B | $110B | $576.24 | 18.1× EBIT | 68% |
| Design IP | Margin | $3.6B | $15B | $80.73 | 18.9× EBIT | 69% |
| Company costsHead-office costs no segment carries, valued as one negative business | Cost line | — | −$59B | −$310.25 | — | 68% |
| All businesses | $17B | $66B | $346.72 |
From 2030 back to today
- Enterprise value at end of FY2030$83B
- Plus net cash at FY2030$4.1B
- Equity value at FY2030$87B
- ÷ (1 + 9.57%)^4.3 years at the cost of equity$59B
- + dividends paid on the way, discounted$0B
This reconciliation checks the published Signal Ledger valuation against the net-debt path. The difference is 1.9%, inside our 5% tolerance.
From businesses to one share
- All businesses, valued today$66B
- − borrowings$10B
- − finance leases$0B
- + cash and short-term investments$3.6B
- ÷ diluted shares0.192B
- Signal Ledger valuation$313.17
Year by year to FY2030
| Fiscal year | Revenue | EBITDA | Capex | Free cash flow | Net debt at year end |
|---|---|---|---|---|---|
| FY2026 | $9.7B | $1.2B | $0.2B | $0.8B | $6.3B |
| FY2027 | $11B | $2.5B | $0.2B | $1.9B | $4.7B |
| FY2028 | $13B | $3.2B | $0.3B | $2.4B | $2.5B |
| FY2029 | $15B | $3.9B | $0.3B | $3B | $0.4B cash |
| FY2030 | $17B | $4.9B | $0.3B | $3.7B | $4.1B cash |
What must be true
- Design Automation (EDA and Ansys) grows revenue from $7.8B in FY2026 to $13.4B in FY2030 (1.7×).
- Design IP grows revenue from $1.9B in FY2026 to $3.6B in FY2030 (1.9×).
- Design Automation (EDA and Ansys) raises its EBIT margin from 46.2% to 56.0%.
- Design IP raises its EBIT margin from 22.6% to 27.9%.
- The company spends $1.3B of capital expenditure through FY2030.
- Net debt peaks at $6.4B in FY2025 and stays financeable.
What the price implies
To reach $422.48 at our discount rate, Synopsys Inc would need about $22.6B of FY2030 sales (growth of about 23.5% a year from FY2026) with 50.0% GAAP EBIT margin — versus $17B and 50.0% GAAP EBIT margin in our research.
At the research price of $422.48 (2026-10-23), the price asks more than our assumptions overall. These are operating requirements at that price, not additional valuations or forecasts.
If sales and margins changed together
Each row matches the same research price at our unchanged discount rate, by scaling every operating line's margin by one common factor. Sales cover margin and capacity lines only; other valuation lines stay fixed. Margins are revenue-weighted within each metric, before separately modeled corporate costs and eliminations. The conclusion uses the row at our research margins when sales alone can match the price, otherwise the solved row needing the least sales growth; this is a trade-off between growth and profitability, not a forecast.
| FY2030 sales factor | FY2030 sales | FY2026–30 CAGR | Required FY2030 margin | Requirement |
|---|---|---|---|---|
| 1.33×At research margins | $22.6B | 23.5% | 50.0% GAAP EBIT | Within margin guardrails |
| 1.50× | $25.5B | 27.3% | 47.1% GAAP EBIT | Within margin guardrails |
| 2.00× | $34B | 36.8% | 41.4% GAAP EBIT | Within margin guardrails |
| 3.00× | $51B | 51.3% | 35.5% GAAP EBIT | Within margin guardrails |
CAGR uses $9.7B of same-scope FY2026 sales from the published model or its sourced research base, over four fiscal years. “Within margin guardrails” checks numeric limits only, not commercial plausibility. Each line and year must stay at or below 50.0% GAAP EBIT and 100% EBITDA, or our research margin where that is higher; capacity EBIT uses the engine's equipment depreciation. Unsolved margins are not extrapolated.
- Implied discount rate
- 7.6%
- All-business FY2030 sales factor
- 1.33×
The WACC that makes model value equal the price, shifting WACC and cost of equity by the same amount. Model: 9.0% WACC · 9.6% cost of equity.
FY2030 revenue would need to reach $22.6B (model: $17B) across the margin and capacity businesses. FY1 stays fixed; the sales change ramps to FY2030 and stays at that factor thereafter.
If only one business changed
Businesses with margin or capacity revenue paths, ordered by value today. Revenue and margin are separate alternatives; these requirements are not added together.
Design Automation (EDA and Ansys)
- Revenue alone
- FY2030 revenue would need to reach $17.7B (model: $13.4B).
- Margin alone
FY2030 EBIT margin would need to reach 66.6% (model: 56.0%).
Design IP
- Revenue alone
- This business alone cannot get there within the search range.
- Margin alone
FY2030 EBIT margin would need to reach 65.7% (model: 27.9%).
Mechanical requirements, not forecasts. The separate sales-only and single-business factors are searched from 0.1× to 6×; an unsolved comparison means this business alone cannot get there within those bounds. Single-business revenue changes apply from FY2 onward; margin changes scale the full EBIT or EBITDA margin path. Mixed groups show revenue-weighted EBIT and EBITDA margins separately. Requirements above 100% are not feasible margins. Joint rows instead search non-negative uniform margin factors only up to the EBIT/EBITDA guardrails; the entire margin path scales, including post-FY2030 convergence. Sales and margins change together only in that table. The rate search runs from the largest terminal growth rate plus 0.5 percentage points to 30% WACC.
The discount rate
- Cost of equity
- 9.57%
- WACC
- 8.97%
- 10-year Treasury · model / spot
- 3.87% · 5.13%
r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.14 after Blume adjustment × 5%, rounded to 0.01% (1bp)
methodology §4.5: market-weighted WACC, not rounded
The model uses the recorded 5-year average Treasury yield. The spot yield is shown for context.
Every input, with its source
Show 20 inputs · reported, guidance and rule-based
| Input | Value | Basis | Why |
|---|---|---|---|
| Revenue FY2026Design Automation (EDA and Ansys) | $7.8B | Rule | target (methodology §4.2), growth 46.6% investor.synopsys.com ↗ · news.synopsys.com ↗ |
| Revenue FY2030Design Automation (EDA and Ansys) | $13.4B | Guidance | target (methodology §4.2), growth 14.5% investor.synopsys.com ↗ · news.synopsys.com ↗ |
| EBIT margin FY2030Design Automation (EDA and Ansys) | 56.0% | Guidance | linear path to 56.0% by FY2030 (management target) investor.synopsys.com ↗ · sec.gov ↗ |
| Maintenance capexDesign Automation (EDA and Ansys) | 2.0% | Rule | No verified maintenance/growth split; explicit rule default 2% of revenue. sec.gov ↗ |
| Terminal growthDesign Automation (EDA and Ansys) | 3.0% | Rule | methodology §4.2 terminal growth for a growth line Valuation methodology §4.2 · Read methodology ↗ |
| Revenue FY2026Design IP | $1.9B | Reported | target (methodology §4.2), growth 10.8% investor.synopsys.com ↗ · news.synopsys.com ↗ |
| Revenue FY2030Design IP | $3.6B | Guidance | target (methodology §4.2), growth 17.0% investor.synopsys.com ↗ · news.synopsys.com ↗ |
| EBIT margin FY2030Design IP | 27.9% | Rule | linear path to 27.9% by FY2030 (§4.3 E2: 4.0000 points = 4pp × clamp((CAGR − 1.5%) / 2%, 0, 1); revenue CAGR 15.7% to FY2030; no cited expansion evidence) investor.synopsys.com ↗ · sec.gov ↗ |
| Maintenance capexDesign IP | 2.0% | Rule | No verified maintenance/growth split; explicit rule default 2% of revenue. sec.gov ↗ |
| Terminal growthDesign IP | 3.0% | Rule | methodology §4.2 terminal growth for a growth line Valuation methodology §4.2 · Read methodology ↗ |
| Share of revenue FY2026Company costs | 31.1% | Guidance | Annual cost baseline $2.194B; scales with operating revenue; full reconciliation in research news.synopsys.com ↗ |
| Share of revenue FY2034Company costs | 23.2% | Rule | §4.3.2 sourced company-cost refresh by FY2027; includes SBC and all recurring adjustments. FY2027 midpoint adjustments: acquired amortization $1.545B + SBC $0.970B + restructuring $0.075B, divided by midpoint revenue $11.150B =23.22869955%. Equivalent to the GAAP/non-GAAP expense gap of $2.590B. Holding this ratio in FY2028–34 is our assumption; the issuer cannot reconcile FY2028–30 GAAP. SBC and acquisition costs remain expensed. investor.synopsys.com ↗ |
| WACCDiscount rates | 8.97% | Rule | methodology §4.5: market-weighted WACC, not rounded FRED DGS10 2021-10-20..2026-10-21 |
| Cost of equityDiscount rates | 9.57% | Rule | r_f 3.87% (5-year average 10-year Treasury yield 3.87% (spot 5.13% on 2026-10-21)) + β 1.14 after Blume adjustment × 5%, rounded to 0.01% (1bp) 60 monthly returns vs SPY, 2021-09..2026-09 (adjusted closes) |
| Tax rateDiscount rates | 18.0% | Guidance | FY2027 normalized non-GAAP tax guidance 18%, also consistent with FY2026. investor.synopsys.com ↗ |
| Cash and short-term investmentsBalance sheet | $3.6B | Reported | cash, cash equivalents and short-term investments; use consolidated short-term investment total once, including all security classes sec.gov ↗ |
| BorrowingsBalance sheet | $10.0B | Reported | borrowings due within a year plus long-term borrowings us-gaap:LongTermDebtCurrent · 0000883241-26-000025 + us-gaap:LongTermDebtNoncurrent · 0000883241-26-000025 |
| Finance leasesBalance sheet | $0.0B | Reported | no finance lease liability reported balance sheet 2026-07-31 |
| SharesBalance sheet | 0.192B | Reported | shares outstanding as of 2026-08-24 cover page of 10-Q 0000883241-26-000025 |
| Dividends per yearShareholders | $0.0B | Reported | Most recent annual ordinary cash dividends; verify continuation against the latest release; no future repurchases. × 0.192B shares sec.gov ↗ |
Research notes
- share-count comparison: 0.192319B quarter 2026-05-01..2026-07-31 · 0000883241-26-000025; point-in-time denominator retained
- unallocated company costs: $2.2B a year (31.1% of trailing revenue), growing with the lines, valued as one negative business
- cost of equity 9.57% (β 1.14 after Blume adjustment), WACC 9.0%
- §4.5 leverage: D/E 0.124, net debt/EBITDA 11.08, β_lev 0.881, β 1.141 → 1.141; D $10.04B, E $80.96B, cash $3.61B, base EBITDA $0.58B
Signal Ledger research under one stated scenario — management's targets are delivered — not a forecast that they will be and not investment advice. The research desk (GPT-6.1 (Codex)) gathers filings, guidance and targets; deterministic code applies the samepublished rules to every company and checks the result. Inputs may contain errors; follow the source links before relying on them. Read our valuation methodology →