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Analog Devices (ADI) Q2 Earnings & Revenues Beat, Rise Y/Y

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Analog Devices Inc. (ADI - Free Report) has reported second-quarter fiscal 2022 adjusted earnings of $2.40 per share, beating the Zacks Consensus Estimate by 13.2%. The bottom line rose 56% year over year.

Revenues of $2.97 billion surpassed the Zacks Consensus Estimate of $2.86 billion. Also, the top line improved 79% year over year.

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

Although the pandemic-led supply challenges and rising geopolitical tensions remain overhangs for the company, its expanding capacity and solid booking momentum are likely to benefit its financial performance in the days ahead.

Strong trends of automation, electrification and advanced connectivity remain major positives.

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

Revenues by End Markets

Industrial: Analog Devices generated revenues of $1.5 billion (accounting for 51% of the total revenues), which grew 54% year over year.

Communications: Revenues from the market were $473.1 million (16% of revenues), increasing 70% year over year.

Automotive: Revenues from the market summed $633.9 million (21% of revenues), up 145% from the year-ago quarter’s level.

Consumer: The market generated revenues of $363.9 million (12% of revenues), reflecting 12% growth on a year-over-year basis.

Operating Details

The adjusted gross margin expanded 330 basis points (bps) on a year-over-year basis to 74.2%.

Adjusted operating expenses were $710.2 million, up 46.8% from the year-ago quarter’s level. As a percentage of revenues, adjusted operating expenses were 23.9%, contracting 520 bps year over year.

The adjusted operating margin expanded 860 bps on a year-over-year basis to 50.3% in the reported quarter.

Balance Sheet & Cash Flow

As of Apr 30, 2022, cash and cash equivalents were $1.7 billion, down from $1.8 billion as of Jan 29, 2022.

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

Net cash provided by operations was $1.2 million in the reported quarter, up from $856.4 million in the prior quarter.

ADI generated $1.1 billion of free cash flow in the fiscal second quarter.

Additionally, Analog Devices returned $1.2 billion to its shareholders, of which it made dividend payments of $398 million and repurchased shares worth $776 million in the fiscal second quarter.

Guidance

For third-quarter fiscal 2022, ADI expects revenues of $3.05 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $2.89 billion.

Non-GAAP earnings are expected to be $2.42 (+/- $0.10) per share. The consensus mark for the same is pegged at $2.18 per share.

The company anticipates non-GAAP operating margins of 49.5% (+/- 70 bps).

Zacks Rank & Other Stocks to Consider

Currently, Analog Devices carries a Zacks Rank #2 (Buy).

Investors interested in the broader technology sector can consider some other top-ranked stocks like Avnet (AVT - Free Report) , Monolithic Power Systems (MPWR - Free Report) and MaxLinear (MXL - Free Report) . While Avnet and Monolithic Power Systems currently sport a Zacks Rank #1 (Strong Buy), MaxLinear carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet has gained 8% in the past year. The long-term earnings growth rate for AVT is currently projected at 37.2%.

Monolithic Power Systems has gained 34.8% in the past year. The long-term earnings growth rate for MPWR is currently projected at 25%.

MaxLinear has rallied 21.9% in the past year. The long-term earnings growth rate for MXL is currently projected at 20%.