Synopsys Inc. (NASDAQ:SNPS)

The valuation ratios exhibit varied trends over the observed period. Generally, the period from January 2021 to October 2021 demonstrates increasing valuations across all reported ratios. Following this, a period of fluctuation and, in some cases, decline is observed through October 2022. The period from January 2023 to October 2023 shows a renewed increase in valuation ratios, followed by a significant shift downwards in the final quarters of 2024 and into the first half of 2025.

Price to Earnings (P/E) Ratio

The P/E ratio began at 56.52 in January 2021 and increased to a peak of 73.37 by October 2021. It then decreased to 46.52 by April 2022, before fluctuating between 51.76 and 67.52 through October 2023. A notable decline is then observed, falling to 33.17 by April 2025. This suggests a decreasing investor willingness to pay for each dollar of earnings, or potentially, expectations of lower future earnings.

Price to Operating Profit (P/OP) Ratio

Similar to the P/E ratio, the P/OP ratio increased from 59.98 in January 2021 to 75.64 in October 2021. It experienced a decline to 42.54 by April 2022, with subsequent fluctuations. The ratio peaked again at 67.90 in October 2023, before a substantial decrease to 55.22 by April 2025. The trend mirrors that of the P/E ratio, indicating a similar shift in valuation relative to operating profitability.

Price to Sales (P/S) Ratio

The P/S ratio followed a similar pattern, rising from 10.69 in January 2021 to 13.22 in October 2021, then decreasing to 9.86 by April 2022. It increased to 14.75 by October 2023, and then decreased significantly to 11.53 by April 2025. The increase to 17.44 in July 2025 is an outlier, followed by a decrease to 13.05 in October 2025. This suggests a changing valuation relative to revenue generation.

Price to Book Value (P/BV) Ratio

The P/BV ratio demonstrated an increase from 8.37 in January 2021 to 10.50 in October 2021, followed by a decrease to 8.43 by April 2022. It rose to a peak of 14.02 by October 2023, and then experienced a dramatic decline to 3.25 by October 2025. This represents a significant reduction in the market’s valuation of the company’s net asset value, potentially indicating concerns about asset quality or future profitability. The magnitude of this decline is greater than observed in the other ratios.

The pronounced declines observed in all ratios during the latter part of the period suggest a potential shift in market sentiment or a reassessment of the company’s future prospects. The most significant change is evident in the P/BV ratio, indicating a substantial decrease in the market’s valuation of the company’s book value.

The price-to-earnings (P/E) ratio for the observed period demonstrates considerable fluctuation. Initially, the ratio exhibited a decreasing trend from 56.52 to 45.71 between January 31, 2021, and April 30, 2021. This was followed by an increase to 73.37 by October 31, 2021, before declining to 48.45 by January 31, 2022.

Initial Period (Jan 31, 2021 – Oct 31, 2021)

The P/E ratio experienced volatility, moving from a high of 56.52 to a peak of 73.37. This suggests shifting investor sentiment or expectations regarding future earnings during this timeframe. The initial decrease followed by a substantial increase indicates a dynamic market response.

From January 31, 2022, through October 31, 2022, the P/E ratio remained relatively stable, fluctuating between 46.52 and 53.76. A subsequent increase was observed, reaching 67.52 by April 30, 2023, before peaking at 70.08 in October 31, 2023.

Period of Relative Stability (Jan 31, 2022 – Oct 31, 2022)

The consistency in the P/E ratio during this period may indicate a period of more predictable earnings or a stabilization of investor expectations. The range of fluctuation remained comparatively narrow.

A significant decline in the P/E ratio occurred between October 31, 2023, and October 31, 2024, dropping from 70.08 to 33.69. This substantial decrease is followed by a rebound to 56.20 by July 31, 2025, and a further increase to 69.11 by October 31, 2025. This recent volatility suggests a potentially significant shift in market perception or earnings expectations.

Recent Volatility (Oct 31, 2023 – Oct 31, 2025)

The dramatic decrease in the P/E ratio followed by a subsequent recovery indicates a period of considerable uncertainty. The large swing suggests a reassessment of the company’s value, potentially driven by changes in earnings forecasts or broader market conditions. The final increase to 69.11 suggests a renewed positive outlook.

Overall, the P/E ratio demonstrates a non-linear pattern over the analyzed period. While periods of relative stability are present, the ratio is characterized by significant fluctuations, particularly in the latter portion of the observed timeframe. These changes warrant further investigation into the underlying drivers of earnings and investor sentiment.

The Price to Operating Profit (P/OP) ratio for the observed period exhibits considerable fluctuation. Initially, the ratio decreased from 59.98 to 49.28 between January 31, 2021, and April 30, 2021, followed by an increase to 65.25 by July 31, 2021, and peaking at 75.64 by October 31, 2021. A subsequent decline was noted through January 31, 2022, reaching 47.17.

From January 31, 2022, through October 31, 2022, the P/OP ratio demonstrated a period of relative stability, fluctuating between 42.54 and 48.91. A moderate increase occurred through April 30, 2023, reaching 62.50, before a substantial surge to 67.90 by July 31, 2023, and a significant peak at 67.90, continuing to 567.06 by October 31, 2023.

Overall Trend

The P/OP ratio generally trended upwards over the analyzed period, particularly exhibiting a pronounced increase in late 2023. However, this upward trend was punctuated by periods of decline and stabilization. The most recent observations indicate a substantial decrease in the ratio, falling from 64.29 in January 2024 to 100.63 in October 2025.

Recent Volatility

The period from January 31, 2024, to October 31, 2025, shows increased volatility. The ratio decreased from 64.29 to 56.16, then increased to 57.97, before a significant drop to 101.65 and a further decline to 100.63. This suggests a potential shift in investor sentiment or a change in the company’s operating performance relative to its share price.

Peak and Trough Values

The highest observed P/OP ratio was 75.64 (October 31, 2021), while the lowest was 42.54 (April 30, 2022). The recent values, while lower than the peak, remain elevated compared to the trough, indicating a generally higher valuation relative to operating profit compared to earlier periods.

The fluctuations in the P/OP ratio suggest that the market’s assessment of the company’s future earnings potential has been dynamic. The recent decline warrants further investigation to determine the underlying factors contributing to this shift.

The Price-to-Sales (P/S) ratio for the observed period demonstrates considerable fluctuation. Initially, the ratio decreased from 10.69 to 9.27 between January 31, 2021, and April 30, 2021. A subsequent increase was then noted, peaking at 13.22 by October 31, 2021, before declining to 9.78 by January 31, 2022.

Initial Period (Jan 31, 2021 – Oct 31, 2021)

The P/S ratio exhibited volatility during this timeframe. The initial decline may suggest a temporary undervaluation or a correction following prior gains. The subsequent rise could indicate increasing investor confidence or expectations of future sales growth. The peak in October 2021 represents the highest value within the first year of observation.

From January 31, 2022, through October 31, 2022, the P/S ratio generally trended upwards, reaching 11.21 in July 2022, followed by a slight decrease to 10.03. A more substantial increase occurred between October 31, 2022, and October 31, 2023, with the ratio climbing from 10.03 to 14.75. This period reflects a significant increase in the market’s valuation of the company’s sales.

Growth Phase (Jan 31, 2022 – Oct 31, 2023)

The consistent increase in the P/S ratio during this period suggests positive market sentiment and potentially strong revenue performance. The substantial jump in late 2023 is particularly noteworthy, potentially driven by specific company announcements or broader market conditions. The ratio nearly doubled from the beginning of 2022 to the end of 2023.

Following the peak in October 2023, the P/S ratio experienced a sharp decline to 13.05 by April 30, 2025, with significant fluctuations in between. The ratio reached a high of 17.44 in July 2025 before falling to 13.05 by the end of the observation period. This recent volatility suggests increased uncertainty or a reassessment of the company’s growth prospects.

Recent Volatility (Oct 31, 2023 – Oct 31, 2025)

The recent fluctuations in the P/S ratio indicate a period of increased market sensitivity. The initial decline from the peak in late 2023 could be attributed to profit-taking, changing market conditions, or concerns about future sales. The subsequent spike and subsequent decline in 2025 suggest a dynamic valuation influenced by short-term factors. The final value of 13.05 represents a decrease from the peak but remains elevated compared to earlier periods.

Throughout the entire period, the P/S ratio remained positive, indicating that the market consistently assigned a value to the company’s sales. However, the degree of valuation varied considerably, reflecting changing investor perceptions and market dynamics.

The price-to-book value (P/BV) ratio for the observed period demonstrates considerable fluctuation. Initially, the ratio exhibited variability, moving from 8.37 to 7.26, then increasing to a peak of 10.50 before settling around the 9 to 10 range through late 2022. A significant upward surge began in early 2023, culminating in a high of 14.02 in October 2023. Subsequently, the ratio experienced a marked decline, falling to 3.25 by October 2025.

Initial Period (Jan 2021 – Oct 2021)

The P/BV ratio fluctuated within a relatively narrow band, ranging from 7.26 to 10.50. This suggests a moderate level of investor confidence in the net asset value of the company during this timeframe. The initial decrease followed by an increase could reflect short-term market sentiment or specific company announcements.

Growth Phase (Jan 2022 – Oct 2023)

From January 2022 through October 2023, the P/BV ratio generally trended upwards, increasing from 8.17 to 14.02. This indicates a growing premium investors were willing to pay for each dollar of net asset value, potentially driven by positive earnings expectations or improved market conditions. The increase was particularly pronounced in the latter half of 2023.

Decline Phase (Jan 2024 – Oct 2025)

A substantial decline in the P/BV ratio is evident from January 2024 onwards, decreasing from 13.16 to 3.25. This dramatic decrease suggests a significant shift in investor perception regarding the company’s net asset value. Potential contributing factors could include concerns about future profitability, increased risk factors, or a reassessment of the company’s intrinsic value. The book value per share increased significantly during this period, while the share price decreased, contributing to the lower ratio.

Book Value Per Share Trend

Book value per share consistently increased throughout the observed period, rising from 32.04 to 148.07. This indicates a steady accumulation of net assets. However, the share price did not consistently follow this upward trend, particularly evident in the latter portion of the period, which explains the declining P/BV ratio.

The observed volatility in the P/BV ratio warrants further investigation to determine the underlying drivers of these changes. The recent decline, coupled with the continued growth in book value per share, suggests a potential disconnect between market perception and the company’s underlying asset base.