Analog Devices Inc. (ADI - Free Report) reported first-quarter fiscal 2020 adjusted earnings of $1.03 per share, beating the Zacks Consensus Estimate by 3%. However, the bottom line decreased 22.6% year over year and 13.4% sequentially.
Revenues of $1.304 billion surpassed the Zacks Consensus Estimate of $1.301 billion. However, the top line declined 15% year over year and 9.6% from the fiscal fourth quarter.
This downside can be attributed to weak performance of the company in all the end-markets served. Moreover, the top line was negatively impacted by macroeconomic headwinds.
Nevertheless, Analog Devices’ deepening focus on efficient capital deployment and executing customer-centric approach remains a positive. Additionally, the company expects stabilization in the end-market demand in second-quarter fiscal 2020.
Revenues by End Markets
Industrial: The company generated revenues of $744.1 million (accounting for 52% of total revenues), which was flat year over year.
Communications: Revenues from this market came in at $260.1 million (18% of revenues), decreasing 19% year over year.
Automotive: Revenues from this market came in at $226.1 million (16% of revenues), down 8% from the year-ago quarter.
Consumer: This market generated revenues of $212.8 million (15% of revenues), reflecting a decline of 7% on a year-over-year basis.
Operating Details
Non-GAAP gross margin contracted 180 basis points (bps) on a year-over-year basis to 68.5%.
As a percentage of revenues, adjusted operating expenses were 31.6%, expanding 250 bps from the year-ago quarter.
Non-GAAP operating margin contracted 430 bps on a year-over-year basis to 36.9% during the reported quarter.
Balance Sheet & Cash Flow
As of Feb 1, 2020, cash and cash equivalents were $654.4 million, up from $648.3 million as of Nov 2, 2019.
Long-term debt was approximately $4.7 billion, down from $5.2 billion in the prior quarter.
Net cash provided by operations was $349.6 million in the fiscal first quarter, down from $658 million in the prior quarter.
The company generated $294.8 million of free cash flow during the fiscal first quarter.
Additionally, Analog Devices returned $300 million to shareholders through dividends and share repurchases in the reported quarter.
Guidance
For second-quarter fiscal 2020, Analog Devices expects revenues to be $1.35 billion (+/- $50 million). The Zacks Consensus Estimate for the same is pegged at $1.38 billion.
Outbreak of coronavirus remains a concern for the company.
Non-GAAP earnings are expected to be $1.10 (+/- $0.08) per share. The consensus mark for the same is pegged at $1.13 per share.
The company anticipates non-GAAP operating margins to be approximately 37.5% (+/- 100 bps).
Zacks Rank & Key Picks
Analog Devices currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Itron, Inc. (ITRI - Free Report) , NetEase, Inc. (NTES - Free Report) and Five9, Inc. (FIVN - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Itron, NetEase and Five9 is currently pegged at 25%, 41.99% and 10%, respectively.
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Analog Devices Inc. (ADI - Free Report) reported first-quarter fiscal 2020 adjusted earnings of $1.03 per share, beating the Zacks Consensus Estimate by 3%. However, the bottom line decreased 22.6% year over year and 13.4% sequentially.
Revenues of $1.304 billion surpassed the Zacks Consensus Estimate of $1.301 billion. However, the top line declined 15% year over year and 9.6% from the fiscal fourth quarter.
This downside can be attributed to weak performance of the company in all the end-markets served. Moreover, the top line was negatively impacted by macroeconomic headwinds.
Nevertheless, Analog Devices’ deepening focus on efficient capital deployment and executing customer-centric approach remains a positive. Additionally, the company expects stabilization in the end-market demand in second-quarter fiscal 2020.
Revenues by End Markets
Industrial: The company generated revenues of $744.1 million (accounting for 52% of total revenues), which was flat year over year.
Communications: Revenues from this market came in at $260.1 million (18% of revenues), decreasing 19% year over year.
Automotive: Revenues from this market came in at $226.1 million (16% of revenues), down 8% from the year-ago quarter.
Consumer: This market generated revenues of $212.8 million (15% of revenues), reflecting a decline of 7% on a year-over-year basis.
Operating Details
Non-GAAP gross margin contracted 180 basis points (bps) on a year-over-year basis to 68.5%.
As a percentage of revenues, adjusted operating expenses were 31.6%, expanding 250 bps from the year-ago quarter.
Non-GAAP operating margin contracted 430 bps on a year-over-year basis to 36.9% during the reported quarter.
Balance Sheet & Cash Flow
As of Feb 1, 2020, cash and cash equivalents were $654.4 million, up from $648.3 million as of Nov 2, 2019.
Long-term debt was approximately $4.7 billion, down from $5.2 billion in the prior quarter.
Net cash provided by operations was $349.6 million in the fiscal first quarter, down from $658 million in the prior quarter.
The company generated $294.8 million of free cash flow during the fiscal first quarter.
Additionally, Analog Devices returned $300 million to shareholders through dividends and share repurchases in the reported quarter.
Guidance
For second-quarter fiscal 2020, Analog Devices expects revenues to be $1.35 billion (+/- $50 million). The Zacks Consensus Estimate for the same is pegged at $1.38 billion.
Outbreak of coronavirus remains a concern for the company.
Non-GAAP earnings are expected to be $1.10 (+/- $0.08) per share. The consensus mark for the same is pegged at $1.13 per share.
The company anticipates non-GAAP operating margins to be approximately 37.5% (+/- 100 bps).
Zacks Rank & Key Picks
Analog Devices currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Itron, Inc. (ITRI - Free Report) , NetEase, Inc. (NTES - Free Report) and Five9, Inc. (FIVN - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Itron, NetEase and Five9 is currently pegged at 25%, 41.99% and 10%, respectively.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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