Is Synopsys, Inc. (SNPS) Fairly Valued?
Synopsys, Inc. valuation review using P/E, fair value, revenue growth, EPS growth, net margin, and TGMCharts chart exhibits as of July 16, 2026.
By TGMCharts Research · Data as of · Updated
Evaluating Synopsys, Inc. requires looking beyond a single multiple. The equity is priced at 95.23x of trailing net income, which stands above the independent analyst DCF (FMP) benchmark of $251. Whether this premium is sustainable depends on whether historical growth rates and profit margins can uphold the valuation.
The core of the valuation thesis rests on how well operational metrics support the market pricing. Over the past five years, the compound annual revenue expansion reached 16.85% and the annualized growth in earnings per share was 13.07%, accompanied by a net margin of 8.91%. These metrics determine whether the current multiples are structurally supported or overextended.
- Synopsys, Inc. closed at $384 on July 16, 2026.
- Trailing P/E is 95.23x and price-to-sales is 9.21x.
- Analyst DCF (FMP) is $251 with margin of safety at -39.87%.
- Five-year revenue CAGR is 16.85% and five-year EPS CAGR is 13.07%.
- Earnings yield is 1.05% and net margin is 8.91%.
Valuation Setup
The market price, model anchor, growth support, and profitability facts behind the valuation read.
Assessing the Premium Multiple Against Operational Benchmarks
Analyzing the valuation of Synopsys, Inc. requires examining whether the current market valuation is backed by sufficient earnings, cash generation, and underlying operational expansion. With the stock closing at $384 on July 16, 2026, the equity is valued at a trailing earnings multiple of 95.23x. This market pricing sits above the third-party analyst DCF (FMP) model reference, which indicates a negative margin of safety of -39.87%.
We avoid evaluating a business using any single isolated metric. This fundamental review analyzes the relationship between the price-to-earnings multiple, independent fair value benchmarks, price-to-sales ratios, earnings yields, and historical growth trajectories. When these fundamental lines move in tandem, the valuation case rests on firmer ground; conversely, divergence suggests a need for analytical caution.
Market Multiples and Owner Yield Benchmarks
Evaluating what market participants are paying is the first step in determining if the valuation is justified. The company carries a price-to-sales multiple of 9.21x, which corresponds to an earnings yield of 1.05%. Our primary chart exhibits place this market price, the historical price-to-earnings ratio, and the sales multiple in a unified context to prevent over-reliance on a single trailing metric.
SNPS P/E ratio Chart
The trailing earnings multiple is the main valuation exhibit because it connects the market price to reported earnings.
Latest P/E ratio: 95.23x as of July 16, 2026.
A P/E ratio of 95.23x has to be judged against the company's five-year EPS CAGR of 13.07%. If the multiple is high while EPS support is ordinary, the valuation thesis becomes more dependent on investor confidence than on fresh earnings power.
SNPS price-to-sales Chart
Price-to-sales gives a second valuation lens when margins and earnings can move around the cycle.
Latest price-to-sales ratio: 9.21x.
Price-to-sales at 9.21x is most useful beside net margin of 8.91%. A richer sales multiple is easier to defend when margin quality is durable rather than temporarily elevated.
Comparing Market Price to Independent DCF Estimates
The independent analyst DCF (FMP) model serves as an external benchmark, placing the fair value at $251. This calculation yields a margin of safety of -39.87%, indicating that the market price is above this third-party intrinsic value estimate. This figure is treated as a single reference point rather than an absolute verdict; users should explore the interactive valuation tool to model alternative scenarios.
The valuation at a glance
Each input on its own line: what the stock costs against earnings and sales, the model's fair value and how far price sits from it, and the growth and margins behind the business.
SNPS earnings yield Chart
Earnings yield reframes valuation from an owner's-yield perspective rather than a multiple perspective.
Latest earnings yield: 1.05%.
The earnings yield of 1.05% is the counterweight to the P/E ratio. If the yield is thin relative to the quality and growth profile, the valuation case needs more help from future compounding.
Analyzing Five-Year Top-Line and Earnings Growth
A high valuation multiple demands robust underlying growth at both the top and bottom lines. Over the past five years, the compound annual revenue growth rate was 16.85%, while the compound annual earnings per share expansion was 13.07%. Comparing these expansion rates against the trailing multiples helps determine if the current valuation is supported by business expansion or if it is primarily driven by multiple expansion.
SNPS revenue
Revenue history tests whether the valuation is being supported by real business expansion.
Five-year revenue CAGR: 16.85%. This is endpoint-to-endpoint from the fiscal years shown — a depressed start year can inflate it, so read it against the recent bars.
Revenue growth is the business-expansion evidence behind the valuation read. A five-year revenue CAGR of 16.85% helps show how much of the valuation story is coming from company growth instead of only multiple expansion.
SNPS EPS
EPS history checks whether reported earnings are keeping pace with the market multiple.
Five-year EPS CAGR: 13.07%. This is endpoint-to-endpoint from the fiscal years shown — a depressed or negative start year can inflate it, so read it against the recent bars.
A five-year EPS CAGR of 13.07% is the clearest support figure for a P/E-based conclusion. If EPS growth slows while the multiple remains elevated, the article should become more cautious after refresh.
Profitability Quality and Sales Multiple Alignment
Profit margins act as the critical bridge transforming gross revenues into shareholder value. The company's net margin stands at 8.91%, which must be evaluated alongside the price-to-sales multiple of 9.21x. Higher sales multiples are more defensible when net profit margins are structurally resilient, whereas elevated multiples combined with cyclical margins create downside risk if profitability normalizes.
SNPS net margin
Net margin shows whether the company has enough profitability quality to support its valuation.
Net margin (TTM): 8.91%. The bars below are annual fiscal years.
Net margin of 8.91% is a quality signal, not a valuation verdict by itself. It matters because a premium multiple is more defensible when margins are structurally strong and less defensible when margins are peaking.
The Balance Between Growth Support and Multiple Compression Risks
The optimistic case for the valuation relies on the continuation of the 16.85% five-year revenue CAGR and the 13.07% five-year EPS CAGR, alongside the preservation of the 8.91% net margin. Conversely, the cautious case highlights that the trailing earnings multiple of 95.23x and the negative margin of safety of -39.87% leave little room for error if growth decelerates or if capital expenditures pressure cash flows.
Bull and bear case
Valuation support
- Five-year revenue CAGR of 16.85% and five-year EPS CAGR of 13.07% support the business case.
- Net margin of 8.91% is the quality check behind the multiple.
Valuation pressure
- A P/E ratio of 95.23x can become demanding if EPS growth slows.
- The analyst-DCF (FMP) margin of safety at -39.87% should change the valuation read if it deteriorates after refresh.
Key Indicators That Would Alter the Valuation Thesis
The current fundamental outlook would require revision if the market price moves closer to the analyst DCF (FMP) benchmark of $251, or if there is a structural shift in the trailing growth trends. Because we update our data daily, any material divergence between the market price and the underlying operational metrics will immediately register in our updated calculations.
Synthesis of Multiples, Growth, and Cash Generation
In summary, the valuation framework for Synopsys, Inc. requires that its high trailing multiples, independent valuation benchmarks, top-line growth, and profit margins remain aligned. All metrics cited in this analysis are derived directly from standardized financial filings. This research is intended for general informational purposes and does not constitute personalized financial advice or investment recommendations.
FAQ
Is SNPS fairly valued?
Synopsys, Inc. trades at 95.23x trailing earnings with an analyst-DCF (FMP) margin of safety of -39.87%. The cleanest read comes from comparing that valuation to five-year revenue CAGR of 16.85% and five-year EPS CAGR of 13.07%.
What valuation metric matters most for SNPS?
This article anchors on P/E, fair value, margin of safety, price-to-sales, earnings yield, revenue growth, and EPS growth. No single metric is treated as a recommendation.
How often should this SNPS valuation view refresh?
We refresh this note after each daily market close, so the price, fair value, and every figure stay current. Numbers here are as of July 16, 2026.
What would change our mind
- A material move away from the analyst-DCF (FMP) reference of $251.
- A break in five-year EPS support, currently 13.07%.
- Margin quality drifting away from the latest net margin of 8.91%.
The bottom line
Synopsys, Inc. valuation research note from TGMCharts Research, grounded in precomputed fundamentals, chart exhibits, and a frozen claim ledger.
Read next: SNPS fundamentalsContinue with Synopsys, Inc.'s full stock page.How we checked this researchShowHide
Data snapshot · By TGMCharts Research.
Every number in this note comes from data we compute and store ourselves from the company's reported figures, plus verbatim excerpts from its SEC filings. When a value isn't available we say so — we never fill gaps with estimates.
Latest filing excerpt
10-Q · filed 2026-05-27 · period 2026-04-30 · SEC EDGAR source
- “Approximately 49% of the backlog as of April 30, 2026, excluding non-cancellable FSA, is expected to be recognized as revenue over the next 12 months, with the remainder to be recognized thereafter.”
- “We have consistently grown our revenue since 2005, despite periods of global economic uncertainty.”
- “We achieved these results because of our solid execution, leading technologies and strong customer relationships, and because we generally recognize our revenue for software licenses over the arrangement period, which typically approximates two to three years.”
- “Summary of Significant Accounting Policies and Basis of Presentation of the Notes to Consolidated Financial Statements in our Annual Report for a discussion on our revenue recognition policy.”
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Every numeric or dated claim in this note was checked against our stored company data before publishing — each figure below links to the page it comes from.