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Analog Devices (ADI) Beats Q3 Earnings & Revenue Estimates

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Analog Devices Inc. (ADI - Free Report) reported third-quarter fiscal 2020 adjusted earnings of $1.36 per share, which beat the Zacks Consensus Estimate of $1.33. Also, the bottom line increased 8% year over year.

Revenues of $1.46 billion also surpassed the Zacks Consensus Estimate of $1.45 billion. The top line increased 11% sequentially but declined 2% year over year.

The sequential increase in revenues was led by growth in communication and industrial markets.

Revenues by End Markets

Industrial: The company generated revenues of $774.4 million (accounting for 53% of total revenues), up 3% year over year.

Communications: Revenues from this market came in at $363.6 million (25% of revenues), increasing 14% year over year.

Automotive: Revenues from this market came in at $162.5 million (11% of revenues), down 29% from the year-ago quarter.

Consumer: This market generated revenues of $155.7 million (11% of revenues), reflecting a 13% decline on a year-over-year basis.

Analog Devices, Inc. Price, Consensus and EPS Surprise

Analog Devices, Inc. Price, Consensus and EPS Surprise

Analog Devices, Inc. price-consensus-eps-surprise-chart | Analog Devices, Inc. Quote

Operating Details

Non-GAAP gross margin contracted 50 basis points (bps) on a year-over-year basis to 69.9%.

Total operating expenses were $402 million, down 8.1% from the year-ago quarter.

Non-GAAP operating margin expanded 150 bps on a year-over-year basis to 42.3% for the reported quarter.

Balance Sheet & Cash Flow

At fiscal third quarter-end, cash and cash equivalents were $1.09 billion, up from $784.9 million in the prior quarter.

Long-term debt was approximately $5.1 billion, flat sequentially.

Net cash provided by operations was $557.2 million in the fiscal third quarter, up from $429 million in the prior quarter.

The company generated $536 million of free cash flow during the fiscal third quarter.

Additionally, Analog Devices returned $247 million to shareholders through dividends and share repurchases in the reported quarter.

Guidance

For fourth-quarter fiscal 2020, Analog Devices expects revenues to be $1.44 billion (+/- $70 million). The Zacks Consensus Estimate for the same is pegged at $1.43 billion.

Non-GAAP earnings are expected to be $1.32 (+/- $0.10) per share. The consensus mark for the same is pegged at $1.29 per share.

The company anticipates non-GAAP operating margins to be 42% (+/- 100 bps).

Zacks Rank & Other Key Picks

Analog Devices currently has a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include Dropbox (DBX - Free Report) , Lam Research Corporation (LRCX - Free Report) and Maxim Integrated Products, Inc. . While Lam Research sports a Zacks Rank #1 (Strong Buy), both Dropbox and Maxim carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate of Dropbox, Lam Research, and Maxim is pegged at 34.4%, 15.4% and 10%, respectively.

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