As of June 6, 2025, Synopsys Inc's estimated intrinsic value ranges from $115.80 to $484.63 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $346.73 | -28.1% |
| Discounted Cash Flow (5Y) | $276.08 | -42.7% |
| Dividend Discount Model (Multi-Stage) | $249.84 | -48.2% |
| Dividend Discount Model (Stable) | $484.63 | +0.5% |
| Earnings Power Value | $115.80 | -76.0% |
Is Synopsys Inc (SNPS) undervalued or overvalued?
With the current market price at $482.20, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Synopsys Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.58 | 0.85 |
| Cost of equity | 6.5% | 9.6% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 6.4% | 7.4% |
| Debt/Equity ratio | 0 | 0 |
| After-tax WACC | 6.5% | 9.6% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $276 | $38,620M | 84.2% |
| 10-Year Growth | $347 | $49,543M | 72.0% |
| 5-Year EBITDA | $590 | $87,189M | 93.0% |
| 10-Year EBITDA | $670 | $99,474M | 86.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,077M |
| Discount Rate (WACC) | 9.6% - 6.5% |
| Enterprise Value | $11,183M - $16,491M |
| Net Debt | $(4,068)M |
| Equity Value | $15,252M - $20,559M |
| Outstanding Shares | 155M |
| Fair Value | $99 - $133 |
| Selected Fair Value | $115.80 |
| Metric | Value |
|---|---|
| Market Capitalization | $74558M |
| Enterprise Value | $70489M |
| Trailing P/E | 34.47 |
| Forward P/E | 49.05 |
| Trailing EV/EBITDA | 39.35 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.00 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $104.02 |
| Discounted Cash Flow (5Y) | 25% | $69.02 |
| Dividend Discount Model (Multi-Stage) | 20% | $49.97 |
| Dividend Discount Model (Stable) | 15% | $72.69 |
| Earnings Power Value | 10% | $11.58 |
| Weighted Average | 100% | $307.28 |
Based on our comprehensive valuation analysis, Synopsys Inc's weighted average intrinsic value is $307.28, which is approximately 36.3% below the current market price of $482.20.
Key investment considerations:
Given these factors, we believe Synopsys Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.