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Analog Devices (ADI) Q2 Earnings & Revenues Beat Estimates
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Analog Devices Inc. (ADI - Free Report) reported second-quarter fiscal 2019 adjusted earnings of $1.36 per share, beating the Zacks Consensus Estimate of $1.30. The bottom line decreased 9.3% year over year but increased 2.3% sequentially.
Revenues of $1.53 billion topped the consensus mark of $1.51 billion. However, the top line declined 2% year over year and 0.94% from the fiscal first quarter.
This downside can be attributed to weak performance of the company in consumer and industrial end markets during the reported quarter. Moreover, macroeconomic headwinds negatively impacted the top line.
Nevertheless, Analog Devices’ solid momentum in the communications market remained a positive in the quarter under review. Its strengthening relationships with customers and expanding addressable market size are expected to continue aiding business growth.
Coming to share price performance, shares of Analog Devices have returned 4.3% over a year against the industry’s 11.1% decline.
Revenues by End Markets
Industrial: The company generated revenues of $763.5 million (accounting for 50% of the total revenues), which declined 6% year over year.
Communications: Revenues from this market came in at $359.6 million (24% of revenues), increasing 3% year over year. This can be primarily attributed to rising 5G deployments and 4G technology upgrades.
Automotive: Revenues from this market came in at $249.8 million (16% of revenues), flat with the year-ago quarter.
Consumer: This market generated revenues of $153.7 million (10% of revenues), reflecting a 32% significant decline on a year-over-year basis.
Operating Details
Non-GAAP gross margin contracted 90 basis points (bps) on a year-over-year basis to 70.6%.
As a percentage of revenues, adjusted operating expenses were 29%,expanding 80 bps from the year-ago quarter.
Non-GAAP operating margin contracted 170 bps on a year-over-year basis to 41.5% during the reported quarter.
Balance Sheet & Cash Flow
At the end of the fiscal second quarter, cash and cash equivalents were $713.6 million, up from $605.9 million in the comparable year-ago period.
Long-term debt was approximately $5.61 billion, decreasing from $6.23 billion at fiscal first quarter-end.
Net cash provided by operations was $670.9 million, up from $371.8 million in the fiscal first quarter.
The company generated $596 million of free cash flow during the second quarter.
In addition, Analog Devices returned $302 million to its shareholders through dividends and share repurchases.
Guidance
For the third quarter of fiscal 2019, Analog Devices expects revenues to be $1.45 billion (+/- $50 million). The Zacks Consensus Estimate for the same is pegged at $1.56 billion.
Non-GAAP earnings are expected to be $1.22 (+/- $0.07) per share. The consensus mark for the same is pegged at $1.38 per share.
The company anticipates non-GAAP operating margins to be approximately 40.5%.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Long-term earnings growth for Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.
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Analog Devices (ADI) Q2 Earnings & Revenues Beat Estimates
Analog Devices Inc. (ADI - Free Report) reported second-quarter fiscal 2019 adjusted earnings of $1.36 per share, beating the Zacks Consensus Estimate of $1.30. The bottom line decreased 9.3% year over year but increased 2.3% sequentially.
Revenues of $1.53 billion topped the consensus mark of $1.51 billion. However, the top line declined 2% year over year and 0.94% from the fiscal first quarter.
This downside can be attributed to weak performance of the company in consumer and industrial end markets during the reported quarter. Moreover, macroeconomic headwinds negatively impacted the top line.
Nevertheless, Analog Devices’ solid momentum in the communications market remained a positive in the quarter under review. Its strengthening relationships with customers and expanding addressable market size are expected to continue aiding business growth.
Coming to share price performance, shares of Analog Devices have returned 4.3% over a year against the industry’s 11.1% decline.
Revenues by End Markets
Industrial: The company generated revenues of $763.5 million (accounting for 50% of the total revenues), which declined 6% year over year.
Communications: Revenues from this market came in at $359.6 million (24% of revenues), increasing 3% year over year. This can be primarily attributed to rising 5G deployments and 4G technology upgrades.
Automotive: Revenues from this market came in at $249.8 million (16% of revenues), flat with the year-ago quarter.
Consumer: This market generated revenues of $153.7 million (10% of revenues), reflecting a 32% significant decline on a year-over-year basis.
Operating Details
Non-GAAP gross margin contracted 90 basis points (bps) on a year-over-year basis to 70.6%.
As a percentage of revenues, adjusted operating expenses were 29%,expanding 80 bps from the year-ago quarter.
Non-GAAP operating margin contracted 170 bps on a year-over-year basis to 41.5% during the reported quarter.
Balance Sheet & Cash Flow
At the end of the fiscal second quarter, cash and cash equivalents were $713.6 million, up from $605.9 million in the comparable year-ago period.
Long-term debt was approximately $5.61 billion, decreasing from $6.23 billion at fiscal first quarter-end.
Net cash provided by operations was $670.9 million, up from $371.8 million in the fiscal first quarter.
The company generated $596 million of free cash flow during the second quarter.
In addition, Analog Devices returned $302 million to its shareholders through dividends and share repurchases.
Guidance
For the third quarter of fiscal 2019, Analog Devices expects revenues to be $1.45 billion (+/- $50 million). The Zacks Consensus Estimate for the same is pegged at $1.56 billion.
Non-GAAP earnings are expected to be $1.22 (+/- $0.07) per share. The consensus mark for the same is pegged at $1.38 per share.
The company anticipates non-GAAP operating margins to be approximately 40.5%.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Analog Devices, Inc. price-consensus-eps-surprise-chart | Analog Devices, Inc. Quote
Zacks Rank and Stocks to Consider
Analog Devices currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Facebook, Inc. , IAC/InterActiveCorp (IAC - Free Report) and AXT, Inc. (AXTI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Facebook, IAC/InterActiveCorp and AXT is currently projected at 20.2%, 20.5% and 15%, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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