DCF Studio

    SNPS · NMS · Technology

    Synopsys, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 156.06

    Market price

    USD 466.08

    Implied upside

    -66.5%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-10-31

    AdjustedReported capital expenditure averages 2.82% of revenue against depreciation and amortisation of 5.94%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 5.94% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Current EV/EBITDA of 63.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 156.06-66.5%
    Exit multiple
    USD 298.87-35.9%
    Market price
    USD 466.08

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 9.7bnUSD 11.0bnUSD 12.3bnUSD 13.6bnUSD 14.8bnUSD 16.0bnUSD 17.1bnUSD 17.9bnUSD 18.6bnUSD 19.1bn+7.8%
    EBITUSD 2.1bnUSD 2.3bnUSD 2.6bnUSD 2.9bnUSD 3.2bnUSD 3.4bnUSD 3.6bnUSD 3.8bnUSD 4.0bnUSD 4.1bn+7.8%
    NOPATUSD 1.9bnUSD 2.2bnUSD 2.4bnUSD 2.7bnUSD 2.9bnUSD 3.2bnUSD 3.4bnUSD 3.6bnUSD 3.7bnUSD 3.8bn+7.8%
    Add depreciation & amortisationUSD 577.8mUSD 654.0mUSD 731.4mUSD 808.4mUSD 882.5mUSD 951.8mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.1bn+7.8%
    Less capital expenditureUSD -577.8mUSD -690.1mUSD -812.3mUSD -942.4mUSD -1.1bnUSD -1.2bnUSD -1.3bnUSD -1.5bnUSD -1.6bnUSD -1.7bn+12.7%
    Capex, % of revenue5.9%6.3%6.6%6.9%7.3%7.6%7.9%8.2%8.6%8.9%-
    Less increase in working capitalUSD -528.0mUSD -253.7mUSD -258.1mUSD -256.1mUSD -247.1mUSD -230.5mUSD -206.2mUSD -174.6mUSD -136.2mUSD -92.2m-17.6%
    Free cashflow to firmUSD 1.4bnUSD 1.9bnUSD 2.1bnUSD 2.3bnUSD 2.5bnUSD 2.7bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.1bn+9.3%
    Discount factor0.95700.87660.80280.73530.67350.61690.56500.51750.47400.4341-
    Present valueUSD 1.3bnUSD 1.7bnUSD 1.7bnUSD 1.7bnUSD 1.7bnUSD 1.7bnUSD 1.6bnUSD 1.5bnUSD 1.5bnUSD 1.4bn-
    Present Value Of The ForecastUSD 15.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.123Reported 1.184, pulled toward 1.0 (Blume)
    Cost of equity9.65%Risk-free + beta x equity risk premium
    Cost of debt6.73%Risk-free + 184bp, the spread for a BB rating at 2.0x interest cover. Book interest / average debt was lower, at 6.0%.
    Market capitalisationUSD 89.3bn86.2% of capital
    Total debtUSD 14.3bn13.8% of capital, book value as a proxy
    Tax rate6.7%Effective, capped at statutory
    WACC9.18%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 156.06

    58% of EV

    Forecast FCFF, final year
    USD 3.1bn
    Capex at depreciation, working capital in reinvestment
    USD 3.8bn
    Less reinvestment at g/ROIC (14.9% of NOPAT)
    USD -564.5m
    Capitalised
    USD 3.2bn
    ROIC (reported)
    16.8%
    Terminal value, undiscounted
    USD 49.5bn
    Terminal value, discounted
    USD 21.5bn
    Enterprise value
    USD 37.2bn
    Less net debt
    USD 11.3bn
    Equity value
    USD 25.9bn

    Exit at 20.0x EBITDA

    Value per shareUSD 298.87

    74% of EV

    Terminal value, undiscounted
    USD 104.0bn
    Terminal value, discounted
    USD 45.1bn
    Enterprise value
    USD 60.8bn
    Less net debt
    USD 11.3bn
    Equity value
    USD 49.5bn

    Spread between methods: 63%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.18%231.92242.74256.19273.22295.30
    8.18%184.28190.13197.25206.03216.99
    9.18%149.20152.30156.06160.65166.29
    10.18%122.33123.82125.68127.98130.81
    11.18%101.11101.64102.37103.34104.59

    Outlined: this model. Green text: above today's price of 466.08. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year15.2%10.5%22.1%
    EBIT margin25.1%21.3%49.4%
    Discount rate-9.2%5.4%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.