A month has gone by since the last earnings report for Analog Devices (ADI Quick QuoteADI - Free Report) . Shares have lost about 0.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Analog Devices due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Analog Devices Beats Q1 Earnings & Revenue Estimates

Analog Devices has reported first-quarter fiscal 2022 adjusted earnings of $1.94 per share, beating the Zacks Consensus Estimate by 8.4%. The bottom line increased 35% year over year.

Revenues of $2.68 billion surpassed the Zacks Consensus Estimate of $2.61 billion. Also, the top line improved 72% year over year.

The strong performance delivered by Analog Devices across the consumer, communications, industrial and automotive markets drove the top line.

Revenues by End Markets

Industrial: Analog Devices generated revenues of $1.3 billion (accounting for 50% of total revenues), which grew 57% year over year.

Communications: Revenues from the market were $412.4 million (15% of revenues), increasing 46% year over year.

Automotive: Revenues from the market summed $552.7 million (21% of revenues), up 124% from the year-ago quarter’s level.

Consumer: The market generated revenues of $378.1 million (14% of revenues), reflecting 117% growth on a year-over-year basis.

Operating Details

The adjusted gross margin expanded 190 basis points (bps) on a year-over-year basis to 71.9%.

Adjusted operating expenses were $702.4 million, up 54.2% from the year-ago quarter’s level. As a percentage of revenues, adjusted operating expenses were 26.2%, contracting 300 bps year over year.

The adjusted operating margin expanded 510 bps on a year-over-year basis to 45.8% in the reported quarter.

Balance Sheet & Cash Flow

As of Jan 29, 2022, cash and cash equivalents were $1.8 billion, down from $1.9 billion as of Oct 30, 2021.

Long-term debt was $6.254 billion at the end of the fiscal first quarter compared with $6.253 billion at the end of the fiscal fourth quarter.

Net cash provided by operations was $856.4 million in the reported quarter, up from $940.7 million in the prior quarter.

ADI generated $745.3 million of free cash flow in the fiscal first quarter.

Additionally, Analog Devices returned $939 million to its shareholders, of which it made dividend payments of $363 million and repurchased shares worth $576 million in the fiscal first quarter.

Guidance

For second-quarter fiscal 2022, ADI expects revenues of $2.80 billion (+/- $100 million).

Non-GAAP earnings are expected to be $2.07 (+/- $0.10) per share.

The company anticipates non-GAAP operating margins of 46.5% (+/- 70 bps).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 12.66% due to these changes.

VGM Scores

At this time, Analog Devices has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Analog Devices has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.