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Analog Devices (ADI) Q4 Earnings Meet, Revenues Fall Y/Y

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Analog Devices Inc. (ADI - Free Report) delivered fourth-quarter fiscal 2023 adjusted earnings of $2.01 per share, which came in line with the Zacks Consensus Estimate. The bottom line declined 26% from the year-ago quarter’s reported figure.

Revenues of $2.716 billion beat the Zacks Consensus Estimate of $2.713 billion. The top line fell 16% from the year-ago quarter’s reported figure.

Softness in communications, consumer and industrial markets was a major negative.

Nevertheless, the company witnessed solid momentum across the automotive markets during the reported quarter.

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: The market generated revenues of $1.35 billion (accounting for 50% of the total revenues), which fell 20% year over year. The figure missed the Zacks Consensus Estimate of $1.41 million.

Communications: Revenues from the market were $340.2 million (13% of revenues), decreasing 32% from the year-ago fiscal quarter’s reported figure. The figure surpassed the Zacks Consensus Estimate of $332 million.

Automotive: Revenues from the market summed up to $731.4 million (27% of revenues), up 14% from the year-ago fiscal quarter’s level. The figure surpassed the Zacks Consensus Estimate of $678 million.

Consumer: The market generated revenues of $291.4 million (11% of revenues), reflecting a 28% decline from the year-ago fiscal quarter’s reported figure. The figure came below the Zacks Consensus Estimate of $295 million.

Operating Details

The adjusted gross margin contracted 380 basis points (bps) from the year-ago fiscal quarter’s level to 70.2%.

Adjusted operating expenses were $692.1 million, down 6.9% from the year-ago fiscal quarter’s level. As a percentage of revenues, adjusted operating expenses were 25.5%, expanding 260 bps year over year.

The adjusted operating margin contracted 640 bps on a year-over-year basis to 44.7% in the reported quarter.

Balance Sheet & Cash Flow

As of Oct 28, 2023, cash and cash equivalents were $958.1 billion, down from $1.15 billion as of Jul 29, 2023.

Long-term debt was $5.9 billion at the end of the fiscal fourth quarter compared with $6.44 billion at the end of the fiscal third quarter.

Net cash provided by operations was $1.19 billion in the reported quarter, up from $1.14 billion in the prior fiscal quarter.

ADI generated $711 million of free cash flow in the fiscal fourth quarter.

Analog Devices returned $898 million to its shareholders in the fiscal fourth quarter, of which dividend payments accounted for $428 million and repurchased shares amounted to $470 million.

Guidance

For first-quarter fiscal 2024, ADI expects revenues of $2.50 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $2.70 billion.

Non-GAAP earnings are expected to be $1.70 (+/- $0.10) per share. The consensus mark for the same is pinned at $1.94 per share.

Analog Devices anticipates non-GAAP operating margins of 41.5% (+/- 70 bps).

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader technology sector are Badger Meter (BMI - Free Report) , Arista Networks (ANET - Free Report) and Salesforce (CRM - Free Report) . Badger Meter sports a Zacks Rank #1 (Strong Buy), and Arista Networks and Salesforce each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Badger Meter have gained 24.8% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.

Shares of Arista Networks have surged 56.4% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 19.77%.

Shares of Salesforce have gained 57.4% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 22.54%.

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