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Analog Devices (ADI) Q1 Earnings Beat, Revenues Rise Y/Y

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Analog Devices Inc. (ADI - Free Report) reported first-quarter fiscal 2021 adjusted earnings of $1.44 per share, beating the Zacks Consensus Estimate by 9.1%. Further, the bottom line increased 40% year over year but remained flat sequentially.

Revenues of $1.56 billion surpassed the Zacks Consensus Estimate of $1.51 billion. Also, the top line improved 20% year over year and 2.1% from the fourth- quarter fiscal 2020 level as well.

Strong performance delivered by the company across all end-markets, especially the industrial market, drove the year-over-year top line.

Revenues by End Markets

Industrial: The company generated revenues of $855.4 million (accounting for 55% of total revenues), which grew 24% year over year.

Communications: Revenues from this market came in at $281.05 million (18% of revenues), increasing 16% year over year.

Automotive: Revenues from this market summed $245.3 million (16% of revenues), up 19% from the year-ago quarter.

Consumer: This market generated revenues worth$176.7 million (11% of revenues), reflecting 5% growth 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 expanded 150 basis points (bps) on a year-over-year basis to 70%.

Adjusted operating expenses were $455.5 million, up 10.6% from the year-ago quarter. As a percentage of revenues, adjusted operating expenses were 29.2%, contracting 240 bps year over year.

Non-GAAP operating margin expanded 380 bps on a year-over-year basis to 40.7% during the reported quarter.

Balance Sheet & Cash Flow

As of Jan 30, 2021, cash and cash equivalents were $1.05 billion, down from $1.06 billion as of Oct 31, 2020.

Long-term debt was $4.7 billion at the end of the fiscal first quarter, down from $5.1 billion at the end of the fiscal fourth quarter.

Net cash provided by operations was $427.9 million in the reported quarter, down from $673million in the prior quarter.

The company generated $361 million of free cash flow during the fiscal first quarter.

Additionally, Analog Devices returned $386 million to its shareholders of which it made dividend payments worth $229 million and repurchased shares worth $157 million in the fiscal first quarter.

Guidance

For second-quarter fiscal 2021, Analog Devices expects revenues to be $1.60 billion (+/- $50 million). The Zacks Consensus Estimate for the same is pegged at $1.54 billion.

Non-GAAP earnings are expected to be $1.44 (+/- $0.08) per share. The consensus mark for the same is pegged at $1.39 per share.

The company anticipates non-GAAP operating margins to be 41% (+/- 70 bps).

Zacks Rank & Stocks to Consider

Currently, Analog Devices carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are CrowdStrike Holdings Inc. (CRWD - Free Report) , Workday, Inc. (WDAY - Free Report) and MACOM Technology Solutions Holdings, Inc. (MTSI - Free Report) , each presently carrying 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 CrowdStrike, Workday and MACOM is currently pegged at 25%, 25.36% and 37%, respectively.

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