Synopsys Pairs 82.9% Gross Margins and $3.4B of Free Cash Flow With a Buy Signal

Synopsys, Inc. has grown revenue 42.4% over the trailing twelve months to $9.4B, with earnings growth of 89.3% on a TTM basis, while generating about $3.4B of free cash flow. This Synopsys, Inc. stock analysis weighs that momentum against a premium valuation. The scoring model rates SNPS a Buy signal, based on Yahoo Finance data as of November 05, 2026.

What Is Happening With the Stock Price

Shares trade at $463.53, against a two-year range of $373.47 to $619.42. That places the stock in the middle of its two-year range: roughly $90 above the low and about $156 below the high. The market capitalization is about $88.83B. A mid-range price suggests sentiment is neither at a peak nor at a trough, which gives no strong momentum or contrarian reading on its own.

Quality: Is This a Financially Sound Business?

The Quality score is 65 out of 100. Gross margin is a very high 82.9%, though the operating margin is a much lower 14.5% and the net profit margin is 11.4%, which shows heavy operating costs below the gross line. Debt-to-equity is a moderate 0.35. The current ratio is 1.34 and the quick ratio is 1.17, adequate liquidity without a large buffer.

Cash flow stands out in this Synopsys, Inc. stock analysis. Net income can be estimated at about $1.08B (net margin times TTM revenue), while free cash flow is $3.4B, roughly three times as large. Cash generation well above reported profit is a positive, but it is also a finding to understand: it may reflect large non-cash charges such as amortization of acquired intangibles, which would depress reported earnings without reducing cash. Capital efficiency is modest, with return on equity of 3.7% and return on assets of 1.4%, which may indicate a large equity base relative to current profits.

Growth: Does This Company Have Real Upside?

The Growth score is 85 out of 100, the strongest of the three pillars. Revenue grew 42.4% on a TTM basis, far above the 11.6% 5-year CAGR, and earnings grew 89.3% over the TTM period. The gap between the two revenue figures suggests a step-up that may be partly acquisition-driven, so readers should not assume the recent pace is the organic norm. An 82.9% gross margin gives the business strong scalability, and EV/Revenue of 10.19 shows investors are paying a premium for that profile.

Opportunity: Is Now a Good Time to Enter?

The Opportunity score is 40 out of 100, the weakest pillar. The P/E ratio is 81.90, EV/EBITDA is 46.22 and price-to-book is 2.85, which are rich multiples by most standards. The free cash flow yield of 3.9% is a modest offset. The shares sit in the middle of their two-year range, so price position does not add much. The valuation asks for continued strong growth to be justified.

Synopsys, Inc. Stock Analysis: The Bottom Line

The bull case is a high-margin franchise with fast recent growth, free cash flow far above reported profit and moderate leverage. The bear case is a premium valuation, a thin 14.5% operating margin, low returns on equity and a growth rate that may include one-off acquisition effects. The main risk is that a stock priced for strong growth could de-rate if growth slows toward its longer-run 11.6% pace.

With a Recommendation Score of 63 out of 100, the model issues a Buy signal. That signal reflects StreetBriefs’ quantitative scoring model (Quality, Growth, Opportunity) and is a data-driven starting point for further research, not a personalized recommendation to transact. Data may be delayed or contain errors.