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Analog Devices (ADI) Q3 Earnings & Revenues Top Estimates

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Analog Devices Inc. (ADI - Free Report) delivered third-quarter fiscal 2019 adjusted earnings of $1.26 per share, beating the Zacks Consensus Estimate by 4 cents. However, the bottom line decreased 16.6% year over year and 7.3% sequentially.

Revenues of $1.48 billion surpassed the consensus mark of $1.45 billion. However, the top line declined 5% year over year and 3.3% from the previous quarter.

This can be attributed to the company’s weak performance in consumer, industrial and automotive end markets during the reported quarter. Moreover, macroeconomic headwinds affected the top line.

Nevertheless, the company’s solid momentum in the communications market was positive. Further, its strong focus toward product portfolio diversification and innovation remains a tailwind. Also, growth opportunities in electric vehicles and 5G are encouraging and are likely to benefit the company in the near term.

Coming to share price performance, shares of Analog Devices have returned 29% on a year-to-date basis, outperforming the industry’s rally of 27.4%.

Revenues by End Markets

Industrial: The company generated $752.53 million revenues (51% of total revenues), declining 4% year over year.

Communications: Revenues from this market came in $316.46 million (21% of revenues), improving 7% year over year.

Automotive: Revenues from this market came in $227.46 million (15% of revenues), decreasing 9% from the year-ago quarter.

Consumer: This market generated $183.4 million revenues (12% of revenues), plunging 18% on a year-over-year basis.

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

Operating Details

Non-GAAP gross margin contracted 80 bps on a year-over-year basis to 70.4%.

Adjusted operating expenses, as a percentage of revenues came in 29.6%, expanding 80 bps from the year-ago quarter.

Non-GAAP operating margin contracted 160 bps on a year-over-year basis to 40.8% during the reported quarter.

Balance Sheet & Cash Flow

As of Aug 3, 2019, cash and cash equivalents were $612.2 million, down from $713.6 million as of May 4, 2019.

Long-term debt was approximately $5.3 billion, declining from $5.6 billion at the end of fiscal second quarter.

Net cash provided by operations was $552.5 million, down from $670.9 million in the previous quarter.

Further, the company generated $494 million of free cash flow during the reported quarter.

Additionally, Analog Devices returned $300 million to shareholders through dividends and share repurchases.


For the fourth 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 $1.49 billion.

Non-GAAP earnings are expected to be $1.22 (+/- $0.07) per share. The consensus mark for the same is pegged at $1.29 per share.

Further, the company anticipates non-GAAP operating margins to be approximately 40%.

Zacks Rank & Stocks to Consider

Currently, Analog Device carries a Zacks Ranks #4 (Sell).

Some better-ranked stocks in the broader technology sector are Ringcentral, Inc (RNG - Free Report) , Garmin Ltd. (GRMN - Free Report) and LogMein, Inc (LOGM - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Ringcentral, Garmin and LogMein is currently pegged at 16.32%, 7.35% and 5%, respectively.

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