A month has gone by since the last earnings report for Analog Devices (ADI Quick QuoteADI - Free Report) . Shares have lost about 1.1% in that time frame, outperforming 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 Q4 Earnings & Revenue Estimates

Analog Devices reported fourth-quarter fiscal 2022 adjusted earnings of $2.73 per share, beating the Zacks Consensus Estimate by 5.8%. The bottom line rose 58% from the year-ago fiscal quarter’s reported figure.

Revenues of $3.25 billion surpassed the Zacks Consensus Estimate of $3.16 billion. The top line improved 39% from the year-ago fiscal quarter’s reported figure.

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

Revenues by End Markets

Industrial: Analog Devices generated revenues of $1.66 billion (accounting for 51% of the total revenues), which grew 40% year over year.

Communications: Revenues from the market were $501.9 million (15% of revenues), increasing 42% from the year-ago fiscal quarter’s reported figure.

Automotive: Revenues from the market summed $672.3 million (21% of revenues), up 49% from the year-ago fiscal quarter’s level.

Consumer: The market generated revenues of $411.9 million (13% of revenues), reflecting 19% growth from the year-ago fiscal quarter’s tally.

Operating Details

The adjusted gross margin expanded 310 basis points (bps) from the year-ago fiscal quarter’s level to 74%.

Adjusted operating expenses were $743.7 million, up 14.3% from the year-ago fiscal quarter’s level. As a percentage of revenues, adjusted operating expenses were 22.9%, contracting 490 bps year over year.

The adjusted operating margin expanded 800 bps on a year-over-year basis to 51.1% in the reported quarter.

Balance Sheet & Cash Flow

As of Oct 29, 2022, cash and cash equivalents were $1.47 billion, down from $1.52 billion as of Jul 30, 2022.

Long-term debt was $6.55 billion at the end of the fiscal fourth quarter compared with $6.25 billion at the end of the fiscal third quarter.

Net cash provided by operations was $1.15 million in the reported quarter, up from $1.25 billion in the prior fiscal quarter.

ADI generated $845 million of free cash flow in the fiscal fourth quarter.

Additionally, Analog Devices returned $1.21 billion to its shareholders in the fiscal fourth quarter, of which dividend payments accounted for $390 million and repurchased shares amounted to $818 million.

Guidance

For first-quarter fiscal 2023, ADI expects revenues of $3.15 billion (+/- $100 million).

Non-GAAP earnings are expected to be $2.60 (+/- $0.10) per share.

Analog Devices anticipates non-GAAP operating margins of 50% (+/- 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 6.09% due to these changes.

VGM Scores

At this time, Analog Devices has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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. Notably, Analog Devices has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.