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Analog Devices (ADI) Q3 Earnings & Revenues Beat, Rise Y/Y

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Analog Devices Inc. (ADI - Free Report) reported third-quarter fiscal 2022 adjusted earnings of $2.52 per share, beating the Zacks Consensus Estimate by 3.7%. The bottom line rose 47% year over year.

Revenues of $3.11 billion surpassed the Zacks Consensus Estimate of $3.06 billion. Also, the top line improved 77% 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 remained headwinds to ADI, its high-performance analog, mixed-signal and power portfolio contributed well.

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 $1.56 billion (accounting for 50% of the total revenues), which grew 55% year over year.

Communications: Revenues from the market were $490.7 million (16% of revenues), increasing 69% year over year.

Automotive: Revenues from the market summed $659.1 million (21% of revenues), up 127% from the year-ago quarter’s level.

Consumer: The market generated revenues of $404.98 million (13% of revenues), reflecting 136% growth on a year-over-year basis.

Operating Details

The adjusted gross margin expanded 250 basis points (bps) on a year-over-year basis to 74.1%.

Adjusted operating expenses were $746.6 million, up 51.5% from the year-ago quarter’s level. As a percentage of revenues, adjusted operating expenses were 24%, contracting 400 bps year over year.

The adjusted operating margin expanded 650 bps on a year-over-year basis to 50.1% in the reported quarter.

Balance Sheet & Cash Flow

As of Jul 30, 2022, cash and cash equivalents were $1.5 billion, down from $1.7 billion as of Apr 30, 2022.

Long-term debt was $6.252 billion at the end of the fiscal third quarter compared with $6.253 billion at the end of the fiscal second quarter.

Net cash provided by operations was $1.25 million in the reported quarter, up from $1.22 billion in the prior quarter.

ADI generated $1.08 billion of free cash flow in the fiscal third quarter.

Additionally, Analog Devices returned $1.3 billion to its shareholders, of which dividend payments account for $394 million and repurchased shares amount to $906 million in the fiscal third quarter.

Guidance

For fourth-quarter fiscal 2022, ADI expects revenues of $3.15 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $3.11 billion.

Non-GAAP earnings are expected to be $2.57 (+/- $0.10) per share. The consensus mark for the same is pegged at $2.50 per share.

Analog Devices anticipates non-GAAP operating margins of 50.3% (+/- 70 bps).

Zacks Rank & Stocks to Consider

Currently, Analog Devices carries a Zacks Rank #4 (Sell).

Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Arista Networks (ANET - Free Report) , Keysight Technologies (KEYS - Free Report) and ASE Technology (ASX - Free Report) . While Arista Networks sports a Zacks Rank #1 (Strong Buy), Keysight Technologies and ASE Technology carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks has lost 9.6% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 18.9%.

Keysight Technologies has lost 17.4% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.

ASE technology has lost 19.2% in the year-to-date period. The long-term earnings growth rate for ASX is currently projected at 23.1%.