If You Invested $1000 in Synopsys 10 Years Ago, This Is How Much You'd Have Now
How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Synopsys (SNPS) ten years ago? It may not have been easy to hold on to SNPS for all that time, but if you did, how much would your investment be worth today?
Synopsys' Business In-Depth
With that in mind, let's take a look at Synopsys' main business drivers.
Synopsys is a vendor of electronic design automation (EDA) software to the semiconductor and electronics industries. The company offers a full suite of products used in the logic synthesis and functional verification phases of chip design, including a broad array of reusable design building blocks. It also sells physical synthesis and physical design products as well as physical verification products.
The company’s products are used to design a chip, from concept to the point of delivery to the manufacturer for fabrication. Synopsis provides software and hardware, which are used to develop electronic systems that incorporate chips. Additionally, the company provides Intellectual Property (IP) used in semiconductor design and manufacturing to simplify the design process and accelerate time-to-market for its customers.
Synopsis reports revenues in three segments, namely Time-Based Products, Upfront Products and Maintenance and Service.
Time-Based Products (63% of fiscal 2021 revenues): Segment revenues are recognized as Technology Subscription License (TSL) revenues. Under this segment, the company recognizes revenues from fees over the period of the license or as and when the installments are paid by the customer, whichever is later.
Upfront Products (20%): These revenues are recognized as Term License revenues. Under this segment, the company recognizes revenues from term licenses in full after the completion of the shipment of the software, wherein at least 75% of the license fee is paid within a year of shipment, after fulfilling all other revenue recognition criteria.
Maintenance and Service (17%): Under this segment revenues come from maintenance fees that are generated over the maintenance period; along with revenues generated from professional service and training fees.
The company conducts its business across four geographic regions namely: The United States (47% of fiscal 2021 revenues), China(14%), Europe (10%) ,Korea (10%) and others (19%).
Synopsys’ competitors include EDA vendors like Cadence Design Systems Inc. and Mentor Graphics Corporation.
Bottom Line
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Synopsys ten years ago, you're likely feeling pretty good about your investment today.
A $1000 investment made in August 2012 would be worth $11,314.38, or a 1,031.44% gain, as of August 23, 2022, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 192.75% and gold's return of -0.15% over the same time frame.
Looking ahead, analysts are expecting more upside for SNPS.
Synopsys is benefiting from strong design wins owing to a robust product portfolio. Growth in work-and-learn from home trend is driving demand for bandwidth. Moreover, strong traction for Synopsys’ Fusion Compiler product boosted the top line. Growing demand for advanced technology, design, IP and security solutions is also creating solid prospects. Moreover, rising impact of artificial intelligence, 5G, internet of things and big data is driving investments in new compute and machine learning architectures. The stock has outperformed the industry in the year-to-date period. However, Synopsys is hurting from supply-chain disruptions stemming from the pandemic. The company is also witnessing stiff competition. Moreover, geopolitical challenges coupled with uncertainties related to restrictions over trade with Huawei are other woes.
The stock is up 6.05% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 4 higher, for fiscal 2022. The consensus estimate has moved up as well.
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