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Why Is Analog Devices (ADI) Up 10.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Analog Devices (ADI - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Analog Devices due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Analog Devices Q2 Earnings Beat, Revenues Down Y/Y
Analog Devices Inc. reported second-quarter fiscal 2020 adjusted earnings of $1.08 per share, beating the Zacks Consensus Estimate of $1.05. However, the bottom line decreased 21% year over year.
Revenues of $1.32 billion missed the Zacks Consensus Estimate of $1.33 billion. Also, the top line declined 14% year over year.
B2B revenue increased 3% sequentially led by the communication and industrial sectors.
Operating Details
Non-GAAP gross margin contracted 290 basis points (bps) on a year-over-year basis to 67.7%.
Total operating expenses were $506.2 million, down 10.9% from the year-ago quarter.
Non-GAAP operating margin contracted 350 bps on a year-over-year basis to 38% during the reported quarter.
Balance Sheet & Cash Flow
At the end of fiscal second quarter, cash and cash equivalents were $784.9 million, up from $654.4 million in the prior quarter.
Long-term debt was approximately $5.1 billion, up from $4.7 billion in the prior quarter.
Net cash provided by operations was $429 million in the fiscal second quarter, up from $349.6 million in the prior quarter.
The company generated $369 million of free cash flow during the fiscal second quarter.
Additionally, Analog Devices returned $343 million to shareholders through dividends and share repurchases in the reported quarter.
Guidance
For third-quarter fiscal 2020, Analog Devices expects revenues to be $1.32 billion (+/- $70 million).
Non-GAAP earnings are expected to be $1.08 (+/- $0.11) per share.
The company anticipates non-GAAP operating margins to be approximately 38.3% (+/- 150 bps).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Analog Devices has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Analog Devices 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 10.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Analog Devices (ADI - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Analog Devices due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Analog Devices Q2 Earnings Beat, Revenues Down Y/Y
Analog Devices Inc. reported second-quarter fiscal 2020 adjusted earnings of $1.08 per share, beating the Zacks Consensus Estimate of $1.05. However, the bottom line decreased 21% year over year.
Revenues of $1.32 billion missed the Zacks Consensus Estimate of $1.33 billion. Also, the top line declined 14% year over year.
B2B revenue increased 3% sequentially led by the communication and industrial sectors.
Operating Details
Non-GAAP gross margin contracted 290 basis points (bps) on a year-over-year basis to 67.7%.
Total operating expenses were $506.2 million, down 10.9% from the year-ago quarter.
Non-GAAP operating margin contracted 350 bps on a year-over-year basis to 38% during the reported quarter.
Balance Sheet & Cash Flow
At the end of fiscal second quarter, cash and cash equivalents were $784.9 million, up from $654.4 million in the prior quarter.
Long-term debt was approximately $5.1 billion, up from $4.7 billion in the prior quarter.
Net cash provided by operations was $429 million in the fiscal second quarter, up from $349.6 million in the prior quarter.
The company generated $369 million of free cash flow during the fiscal second quarter.
Additionally, Analog Devices returned $343 million to shareholders through dividends and share repurchases in the reported quarter.
Guidance
For third-quarter fiscal 2020, Analog Devices expects revenues to be $1.32 billion (+/- $70 million).
Non-GAAP earnings are expected to be $1.08 (+/- $0.11) per share.
The company anticipates non-GAAP operating margins to be approximately 38.3% (+/- 150 bps).
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Analog Devices has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Analog Devices has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.