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Analog Devices (ADI) Q4 Earnings & Revenues Miss Estimates

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Analog Devices Inc. ADI reported fourth-quarter fiscal 2019 adjusted earnings of $1.19 per share, missing the Zacks Consensus Estimate of $1.21. Moreover, the bottom line decreased 19.6% year over year and 12.5% sequentially.

Revenues of $1.44 billion in the quarter missed the Zacks Consensus Estimate by 0.6%.Also, the top line declined 6% year over year and 5.5% from the fiscal third quarter.

This downside can be attributed to weak performance of the company in all end-markets served. Moreover, macroeconomic headwinds negatively impacted the topline.

Nevertheless, Analog Devices’ strengthening relationships with customers and expanding addressable market size are expected to aid business in the near term.

Analog Devices, Inc. Price, Consensus and EPS Surprise

Revenues by End Markets

Industrial: The company generated revenues of $744.1 million (accounting for 52% of total revenues), which was flat year over year.

Communications: Revenues from this market came in at $260.1 million (18% of revenues), decreasing 19% year over year.

Automotive: Revenues from this market came in at $226.1 million (16% of revenues), down 8% from the year-ago quarter.

Consumer: This market generated revenues of $212.8 million (15% of revenues), reflecting a 7% decline on a year-over-year basis.

Operating Details

Non-GAAP gross margin contracted 250 basis points (bps) on a year-over-year basis to 68.4%.

As a percentage of revenues, adjusted operating expenses were 29.6%,expanding 20 bps from the year-ago quarter.

Non-GAAP operating margin contracted 270 bps on a year-over-year basis to 38.8% during the reported quarter.

Balance Sheet & Cash Flow

At the end of the fiscal fourth quarter, cash and cash equivalents were $648.3 million, up from $612.2 million in the prior quarter.

Long-term debt was approximately $5.19 billion, down from $5.3 billion in the prior quarter.

Net cash provided by operations was $658 million, up from $552.5 million in the fiscal third quarter.

The company generated $607 million of free cash flow during the fiscal fourth quarter.

In addition, Analog Devices returned $372 million to its shareholders through dividends and share repurchases.


For the first quarter of fiscal 2020, Analog Devices expects revenues to be $1.30 billion (+/- $50 million). The Zacks Consensus Estimate for the same is pegged at $1.41 billion.

Non-GAAP earnings are expected to be $1 (+/- $0.07) per share. The consensus mark for the same is pegged at $1.16 per share.

The company anticipates non-GAAP operating margins to be approximately 36.7% (+/- 100 bps).

Zacks Rank and Stocks to Consider

Analog Devices currently carries a Zacks Rank #4 (Sell).Some better-ranked stocks in the broader technology sector include Advantest Corp. ATEYY, Itron, Inc. (ITRI - Free Report) and AMETEK, Inc. AME. While Advantest sports a Zacks Rank #1 (Strong Buy), Itron and AMETEK carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Advantest, Itron and AMETEK is currently projected at 15.5%, 25% and 10.9%, respectively.

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