Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 21 Sept 2026
SNPS· Technology
Synopsys
Synopsys' high gross margins indicate a strong moat, but a P/E of 117.3 suggests valuation risk.
Buffett fit
Partial fit
Owner
51
Durability
70
Management
78
Price
0
Score updated 22 Oct 2026 · analysis from 21 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of Synopsys, we would focus on maintaining its high of 73.5% while managing the high valuation risk indicated by a of 117.3.
The full reasoning comes with a free account.
Synopsys has shown profitability over the past 5 years, indicating a durable business model.
The full reasoning comes with a free account.
Management has shown discipline with a yield of 0.66% and a share count CAGR of 1.2%.
The full reasoning comes with a free account.
The current of 117.3 and earnings yield of 0.85% indicate a high valuation.
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 173.5% is top-quintile in the technology sector.
- 25-year average of 14.6% is sector-leading.
- 3Revenue CAGR of 13.81% over the past 5 years.
- 45-year EPS CAGR of 13.15% indicates solid growth.
Concerns
5- 1 of 117.3 suggests significant valuation risk.
- 2TTM of 1.35% is well below sector average.
- 3Net debt/EBITDA of 3.80 indicates higher than preferred.
- 4 of 7.03% is below sector top-quintile.
Price history
$422+26.8%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Synopsys provides electronic design automation software used in the design and testing of integrated circuits. Its Fusion Design Platform and Verification Continuum Platform are key products. The company has a strong focus on IP solutions for various applications, generating $7.05B in revenue with a 73.5% . Unit economics are solid, driven by high-margin software sales.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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