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Why Is Analog Devices (ADI) Up 3.2% Since Its Last Earnings Report?
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A month has gone by since the last earnings report for Analog Devices, Inc. (ADI - Free Report) . Shares have added about 3.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is ADI due for a pullback? 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.
Recent Earnings
Analog Devices reported first-quarter fiscal 2018 adjusted earnings of $1.42 per share, beating the Zacks Consensus Estimate by 13 cents. Although the bottom line surged 51.1% year over year, it declined 2.1% sequentially. However, the figure surpassed the guided range of $1.20-$1.36.
Revenues of $1.52 billion topped the consensus mark of $1.50 billion and came close to the higher end of the guided range of $1.44-$1.54 billion. Moreover, the top line surged 54.3% year over year but declined 1.5% sequentially.
The strong year-over-year growth was driven by a robust performance from industrial, automotive and communications end-markets.
Revenues by End Markets
Industrial (49% of total revenues) revenues soared 87.4% year over year and 4% sequentially to $743.6 million.
Communications (18.7% of total revenues) revenues surged 63% year over year and 4.1% sequentially to $284.3 million.
Automotive (16.6% of total revenues) revenues jumped 76.4% from the year-ago quarter and 5.1% from the previous quarter to $252.2 million.
Consumer (15.7% of total revenues) revenues declined 11.8% year over year and 23.8% sequentially to $238.5 million.
Operating Details
Non-GAAP gross margin expanded 500 bps on a year-over-year basis and 20 bps sequentially to 71%.
Adjusted operating expenses as percentage of revenues declined 180 bps from the year-ago quarter but increased 110 bps sequentially to 29.4%.
Non-GAAP operating margin expanded 670 bps on a year-over-year basis but contracted 90 bps sequentially to 41.7%.
Balance Sheet & Cash Flow
Analog Devices exited the first quarter with cash and short-term investments of approximately $827.6 million, down from $1.05 billion at the end of the prior quarter.
Long-term debt was approximately $7.38 billion, down from $7.55 billion at the end of the previous quarter.
Net cash provided by operations was $388.7 million, significantly down from $707.4 million reported in the preceding quarter.
Guidance
For the second quarter of fiscal 2018, Analog Devices expects revenues between $1.43 billion and $1.51 billion.
On a non-GAAP basis, the company estimates gross margin in the range of 71-71.5%. Operating expenses are anticipated between $430 million and $440 million.
Analog Devices projects interest and other expense of approximately $60 million. Earnings are expected in the band of $1.30-$1.44 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter.
At this time, ADI has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. 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.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, ADI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Analog Devices (ADI) Up 3.2% Since Its Last Earnings Report?
A month has gone by since the last earnings report for Analog Devices, Inc. (ADI - Free Report) . Shares have added about 3.2% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is ADI due for a pullback? 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.
Recent Earnings
Analog Devices reported first-quarter fiscal 2018 adjusted earnings of $1.42 per share, beating the Zacks Consensus Estimate by 13 cents. Although the bottom line surged 51.1% year over year, it declined 2.1% sequentially. However, the figure surpassed the guided range of $1.20-$1.36.
Revenues of $1.52 billion topped the consensus mark of $1.50 billion and came close to the higher end of the guided range of $1.44-$1.54 billion. Moreover, the top line surged 54.3% year over year but declined 1.5% sequentially.
The strong year-over-year growth was driven by a robust performance from industrial, automotive and communications end-markets.
Revenues by End Markets
Industrial (49% of total revenues) revenues soared 87.4% year over year and 4% sequentially to $743.6 million.
Communications (18.7% of total revenues) revenues surged 63% year over year and 4.1% sequentially to $284.3 million.
Automotive (16.6% of total revenues) revenues jumped 76.4% from the year-ago quarter and 5.1% from the previous quarter to $252.2 million.
Consumer (15.7% of total revenues) revenues declined 11.8% year over year and 23.8% sequentially to $238.5 million.
Operating Details
Non-GAAP gross margin expanded 500 bps on a year-over-year basis and 20 bps sequentially to 71%.
Adjusted operating expenses as percentage of revenues declined 180 bps from the year-ago quarter but increased 110 bps sequentially to 29.4%.
Non-GAAP operating margin expanded 670 bps on a year-over-year basis but contracted 90 bps sequentially to 41.7%.
Balance Sheet & Cash Flow
Analog Devices exited the first quarter with cash and short-term investments of approximately $827.6 million, down from $1.05 billion at the end of the prior quarter.
Long-term debt was approximately $7.38 billion, down from $7.55 billion at the end of the previous quarter.
Net cash provided by operations was $388.7 million, significantly down from $707.4 million reported in the preceding quarter.
Guidance
For the second quarter of fiscal 2018, Analog Devices expects revenues between $1.43 billion and $1.51 billion.
On a non-GAAP basis, the company estimates gross margin in the range of 71-71.5%. Operating expenses are anticipated between $430 million and $440 million.
Analog Devices projects interest and other expense of approximately $60 million. Earnings are expected in the band of $1.30-$1.44 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter.
Analog Devices, Inc. Price and Consensus
Analog Devices, Inc. Price and Consensus | Analog Devices, Inc. Quote
VGM Scores
At this time, ADI has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. 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.
Our style scores indicate that the stock is more suitable for growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, ADI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.