SNPS
Synopsys, Inc.
Technology · Software - Infrastructure · United States · Stock
Score Breakdown
Scored for Safe Long-Term Investing profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- The composite score of 41.6/100 reflects a business with solid revenue growth and a healthy balance sheet, offset by steep declines in net income and EPS that penalized the growth factor.
- Earnings momentum is a significant drag, with net income swinging from a large profit in 2025Q4 to a near-breakeven result in 2026Q2, which the model penalized with a low momentum sub-score.
- The confirmed absence of a dividend and no macro theme assignment both scored zero, contributing to the below-midpoint composite total.
Why Not Higher
- The dramatic deterioration in net income — falling from $2,263,380,000 in FY2024 to $1,332,220,000 in FY2025 annually, and then collapsing further in recent quarters — is the single largest constraint on the score.
- A return on assets of only 2.8% against a total asset base of $48,224,461,000 limits the profitability sub-score, indicating the company's scale has not yet translated into strong capital efficiency.
Data Confidence
8 / 10
High — most data fields present
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $6,127,436,000 to FY2025's $7,054,178,000, a gain of +15.1%, but net income fell sharply from FY2024's $2,263,380,000 to FY2025's $1,332,220,000 (-41.1%), and diluted EPS dropped from FY2024's $14.51 to FY2025's $8.04 (-44.6%).
The model rewarded the solid top-line expansion but heavily penalized the steep declines in net income and earnings per share, producing a below-midpoint score that reflects the mixed quality of growth.
In FY2025, Synopsys posted a net margin of 18.9%, an operating margin of 13.0%, and a return on assets of 2.8%.
The net and operating margins indicate a meaningfully profitable business, but the relatively low return on assets of 2.8% in FY2025 suggests the model tempered the score, reflecting that the company's large asset base limits capital efficiency as measured by ROA.
In FY2025, Synopsys carried a debt-to-equity ratio of 0.48 against total assets of $48,224,461,000.
A debt-to-equity ratio of 0.48 in FY2025 signals a conservatively leveraged balance sheet, and the model rewarded this low relative indebtedness with a high sub-score.
Quarterly revenue rose from 2025Q3's $1,739,737,000 to a peak of $2,408,798,000 in 2026Q1 before pulling back to $2,275,985,000 in 2026Q2, while net income deteriorated sharply from $448,696,000 in 2025Q4 to $64,958,000 in 2026Q1 and further to $17,105,000 in 2026Q2; operating income also remained volatile, ranging from $120,426,000 to $203,046,000 across the four quarters.
Although revenue held at elevated levels, the dramatic collapse in net income in the two most recent quarters and the erratic operating income trend signaled weakening earnings momentum, which the model penalized with a low sub-score.
Synopsys does not currently pay a dividend; this is a genuine characteristic of the company, not a data limitation.
Because the model rewards income generation through dividends, a confirmed non-payer receives the minimum score on this factor.
Synopsys is not currently assigned to any of the 24 tracked macro themes in the model.
The absence of a theme assignment is a neutral classification outcome; it means the model did not apply any thematic tailwind or headwind to the score for this security under its current methodology.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Synopsys delivered solid top-line growth of +15.1% in FY2025, with revenue rising to $7,054,178,000, but the quality of that growth was undermined by a sharp -41.1% decline in net income and a -44.6% drop in diluted EPS, producing a mixed overall picture. The company maintains a conservatively leveraged balance sheet with a debt-to-equity ratio of 0.48 and meaningful profitability margins, yet recent quarterly trends show a dramatic collapse in net income to $64,958,000 in 2026Q1 and $17,105,000 in 2026Q2, signaling deteriorating earnings momentum. The absence of a dividend and no assignment to any tracked macro theme further weighed on the composite score, resulting in a total model score of 41.6/100 and a Monitor Only label. Investors should watch whether the earnings deterioration stabilizes before drawing stronger conclusions.
Plain English
Synopsys is growing its sales nicely, but its profits have fallen off a cliff recently, its balance sheet is solid and not too debt-heavy, and it pays no dividend — all of which adds up to a middling score that says 'keep an eye on it but don't act yet.'
Bull Case vs. Bear Case
Bull Case
- Revenue grew a healthy +15.1% year-over-year in FY2025, reaching $7,054,178,000, demonstrating meaningful top-line expansion.
- The balance sheet remains conservatively leveraged with a debt-to-equity ratio of just 0.48 in FY2025, providing financial stability and flexibility.
- Net margins of 18.9% and operating margins of 13.0% in FY2025 confirm that Synopsys operates a meaningfully profitable business despite recent earnings headwinds.
Bear Case
- Net income fell sharply by -41.1% in FY2025 and diluted EPS dropped -44.6%, signaling that revenue growth is not translating into bottom-line strength.
- Recent quarterly net income collapsed from $448,696,000 in 2025Q4 to just $17,105,000 in 2026Q2, reflecting a dramatic and sustained deterioration in earnings momentum.
- Synopsys pays no dividend and carries no macro theme assignment, both of which scored zero and weighed on the composite result.
What Could Change the Picture
Bullish Triggers
- A sustained recovery in quarterly net income back toward the levels seen in 2025Q3 and 2025Q4 would signal that the earnings deterioration is temporary rather than structural.
- Improvement in return on assets above the current 2.8% would indicate that the company's large asset base is being deployed more efficiently, strengthening the profitability case.
Bearish Triggers
- If quarterly net income continues to decline below the already-low $17,105,000 recorded in 2026Q2, it would suggest the earnings pressure is deepening rather than stabilizing.
- A meaningful increase in the debt-to-equity ratio from its current 0.48 level would erode one of the company's key financial health strengths.
Risk Profile
Medium RiskSynopsys carries a manageable debt-to-equity ratio of 0.48, which limits balance-sheet risk, but the sharp and accelerating decline in quarterly net income — from $448,696,000 in 2025Q4 to $17,105,000 in 2026Q2 — introduces meaningful earnings risk that warrants close monitoring. The volatility in operating income across recent quarters further underscores that near-term profitability is uncertain.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.