At today's price, Synopsys's stock is pricing in about 21.6% annual free-cash-flow growth for the next ten years. Over the past four years, the company's actual FCF growth averaged -0.9% a year — essentially flat, not growing at all.
At its current price, SNPS implies ~21.6% annual FCF growth for the next 10 years, discounted at 9%.
Synopsys's actual 4-year (FY2021–FY2025) FCF growth has averaged -0.9% a year.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical CAGRs from 10-K FY2021 and FY2025 cash flow and income statements. Note: FY2021 revenue reflects the since-divested Software Integrity segment while FY2025 excludes it and includes Ansys — not a perfectly like-for-like comparison, since the portfolio itself changed through M&A and divestiture.
Sensitivity: what if the discount rate moves?
| WACC | Required growth |
|---|---|
| 8% | 18.9% |
| 9% (base case, large stable company) | 21.6% |
| 10% | 24.1% |
| 12% | 28.7% |
Even at the lowest discount rate tested (8%), the required growth rate is 18.9% — still far above the -0.9% four-year actual pace under any reasonable assumption.
What would move this number
- Switching from FY2025's FCF ($1.35B) to a three-year average ($1.38B) barely moves the required rate (21.6% → 21.4%), since the two figures are close.
- FY2025's FCF includes only about 3.5 months of Ansys contribution (the deal closed in July 2025). Once Ansys is reflected for a full year and the promised cost synergies materialize, the underlying "base FCF" could grow — which would lower the required growth rate. That normalized, fully-synergized FCF isn't yet visible in any filing, so it isn't reflected in this calculation.
- Changing the terminal growth rate or the projection window (10 years vs. 5 or 15) would also shift the answer — see the calculation details below.
Show your work
Inputs, sources, model assumptions, and the calculation
- Share price$413.22 — stockanalysis.com, Aug 17, 2026, 4:00pm ET close
- Shares outstanding191.48M — stockanalysis.com, Aug 17, 2026
- Market cap$79.12B — price × shares outstanding (calculated)
- Recent FCF$1.349B — FY2025 operating cash flow $1.519B minus capex $0.169B, 10-K FY2025, p.61
- Total debt$13.485B — 10-K FY2025 balance sheet, p.56
- Cash and equivalents$2.961B — 10-K FY2025 balance sheet, p.56
- Net debt$10.524B — calculated
- Discount rate (WACC)9% base case (8%/10%/12% tested) — large stable-company default
- Terminal growth rate2.5% — long-run GDP-level assumption
Normalization check: FY2025's FCF ($1.349B) is only -2.0% below the three-year (FY2023–2025) average ($1.38B) — well within the ±40% threshold, so used as-is without adjustment.
Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate thereafter, solved by bisection for the value of g that equates present value to today's enterprise value (market cap + net debt).
The fine print
- Change the discount rate, the FCF base, the projection window, or the terminal growth rate, and the answer moves — see the sensitivity table above.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Whether 21.6% growth is realistic depends entirely on whether Ansys integration synergies and a Design IP recovery both materialize — the company's two biggest open questions right now.
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does SNPS's stock price assume?
At today's price, Synopsys's stock is pricing in about 21.6% annual free-cash-flow growth for the next ten years.
How does that compare to Synopsys's actual growth?
Over the past four years, Synopsys's actual free-cash-flow growth averaged -0.9% a year — essentially flat — a large gap from the ~21.6% the current price requires.
What share price was used for this analysis?
This analysis used $413.22, as of Aug 17, 2026.