November 23, 2023
Top 10 Stock Synopsys Strong Buy Recommendation

Latest Research

For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View Synopsys Strong Buy

360 METRICS	November 23, 2023
VALUE
VALUE	10
GROWTH
GROWTH	55
SAFETY
SAFETY	95
SENTIMENT
SENTIMENT	92
360° VIEW
360° VIEW	78

ANALYSIS: With an Obermatt 360° View of 78 (better than 78% compared with alternatives) for 2023, overall professional sentiment and financial characteristics for the stock Synopsys are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Synopsys. The consolidated Growth Rank has a good rank of 55, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 55% of competitors in the same industry. The consolidated Safety Rank at 95 means that the company has a financing structure that is safer than 95% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 92, which means that professional investors are more optimistic about the stock than for 92% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 10, meaning that the share price of Synopsys is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 90% of alternative stocks in the same industry. ...read more

RECOMMENDATION: With a consolidated 360° View of 78, Synopsys is better positioned than 78% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 55), a safe financing structure (Safety Rank of 95), and positive professional market sentiment (Sentiment Rank of 92), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Synopsys compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (55% better than peers). The value rank could be the reverse reflection of that (45%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more

---

Sentiment Strategy: Professional Market Sentiment for Synopsys very positive

SENTIMENT METRICS	November 23, 2023
ANALYST OPINION
ANALYST OPINION	93
OPINIONS CHANGE
OPINIONS CHANGE	50
PRO HOLDINGS
PRO HOLDINGS	88
MARKET PULSE
MARKET PULSE	82
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	92

ANALYSIS: With an Obermatt Sentiment Rank of 92 (better than 92% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock Synopsys is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Synopsys. Analyst Opinions are at a rank of 93 (better than 93% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 50, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Synopsys. The Professional Investors rank is 88, which means that currently, professional investors hold more stock in this company than in 88% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 82 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 82% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 92 (more positive than 92% compared with investment alternatives), Synopsys has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Synopsys stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more

---

Value Strategy: Synopsys Stock Price Value low

VALUE METRICS	November 23, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	5
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	36
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	20
DIVIDEND YIELD
DIVIDEND YIELD	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	10

ANALYSIS: With an Obermatt Value Rank of 10 (worse than 90% compared with alternatives), Synopsys shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Synopsys. Price-to-Sales is 5 which means that the stock price compared with what market professionals expect for future profits is higher than 95% of comparable companies, indicating a low value concerning Synopsys's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 20, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Synopsys. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 36 and Dividend Yield, which is lower than 99% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 10, is a sell recommendation based on Synopsys's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Synopsys? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Synopsys? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Synopsys may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. ...read more

---

Growth Strategy: Synopsys Growth Momentum good

GROWTH METRICS	November 23, 2023
REVENUE GROWTH
REVENUE GROWTH	67
PROFIT GROWTH
PROFIT GROWTH	41
CAPITAL GROWTH
CAPITAL GROWTH	28
STOCK RETURNS
STOCK RETURNS	79
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	55

ANALYSIS: With an Obermatt Growth Rank of 55 (better than 55% compared with alternatives), Synopsys shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Synopsys. Sales Growth has a rank of 67 which means that currently professionals expect the company to grow more than 67% of its competitors. Stock Returns are also above average with a rank of 79. But Capital Growth has only a rank of 28, which means that currently professionals expect the company to grow its invested capital less than 72% of its competitors. Profit Growth is also low, with a rank of only 41, which means that, currently, professionals expect the company to grow its profits below average. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 55, is a buy recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 79% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more

---

Safety Strategy: Synopsys Debt Financing Safety very solid

SAFETY METRICS	November 23, 2023
LEVERAGE
LEVERAGE	74
REFINANCING
REFINANCING	21
LIQUIDITY
LIQUIDITY	100
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	95

ANALYSIS: With an Obermatt Safety Rank of 95 (better than 95% compared with alternatives) for 2023, the company Synopsys has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Synopsys is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Synopsys. Leverage is at a rank of 74, meaning the company has a below-average debt-to-equity ratio. It has less debt than 74% of its competitors. Liquidity is also good at a rank of 100, meaning the company generates more profit to service its debt than 100% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 21, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 79% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 95 (better than 95% compared with alternatives), Synopsys has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Synopsys. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more

---

Combined financial peformance: Synopsys Above-Average Financial Performance

COMBINED PERFORMANCE	November 23, 2023
VALUE
VALUE	10
GROWTH
GROWTH	55
SAFETY
SAFETY	100
COMBINED
COMBINED	69

ANALYSIS: With an Obermatt Combined Rank of 69 (better than 69% compared with investment alternatives), Synopsys (Application Software, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Synopsys are low in value (priced high) with a consolidated Value Rank of 10 (worse than 90% of alternatives). But they show above-average growth (Growth Rank of 55) and are safely financed (Safety Rank of 95, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 69, is a buy recommendation based on Synopsys's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Synopsys exhibits low value (Obermatt Value Rank of 10), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 55). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 95) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more

Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.