Analog Devices Inc. ADI delivered second-quarter fiscal 2023 adjusted earnings of $2.83 per share, beating the Zacks Consensus Estimate by 2.9%. The bottom line rose 18% from the year-ago fiscal quarter’s reported figure.
Revenues of $3.26 billion surpassed the Zacks Consensus Estimate of $3.21 billion. The top line improved by 10% from the year-ago fiscal quarter’s reported figure.
The strong performance delivered by Analog Devices across the industrial and automotive markets drove the top line.
Revenues by End Markets
Industrial: Analog Devices generated revenues of $1.74 billion (accounting for 53% of the total revenues), which grew 16% year over year.
Communications: Revenues from the market were $453.53 million (14% of revenues), decreasing 4% from the year-ago fiscal quarter’s reported figure.
Automotive: Revenues from the market summed up to $784.8 million (24% of revenues), up 24% from the year-ago fiscal quarter’s level.
Consumer: The market generated revenues of $280.1 million (9% of revenues), reflecting a 22% decline from the year-ago fiscal quarter’s reported figure.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Analog Devices, Inc. price-consensus-eps-surprise-chart | Analog Devices, Inc. Quote
The adjusted gross margin contracted 50 basis points (bps) from the year-ago fiscal quarter’s level to 73.7%.
Adjusted operating expenses were $733.1 million, up 3.2% from the year-ago fiscal quarter’s level. As a percentage of revenues, adjusted operating expenses were 22.5%, contracting 140 bps year over year.
The adjusted operating margin expanded 90 bps on a year-over-year basis to 51.2% in the reported quarter.
Balance Sheet & Cash Flow
As of Apr 29, 2023, cash and cash equivalents were $1.18 billion, down from $1.67 billion as of Jan 28, 2023.
Long-term debt was $6.48 billion at the end of the fiscal second quarter compared with $6.54 billion at the end of the fiscal first quarter.
Net cash provided by operations was $1.1 billion in the reported quarter, down from $1.4 billion in the prior fiscal quarter.
ADI generated $797 million of free cash flow in the fiscal second quarter.
Additionally, Analog Devices returned $1.6 billion to its shareholders in the fiscal second quarter, of which dividend payments accounted for $435 million and repurchased shares amounted to $1.15 billion.
For third-quarter fiscal 2023, ADI expects revenues of $3.10 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $3.10 billion.
Non-GAAP earnings are expected to be $2.52 (+/- $0.10) per share. The consensus mark for the same is pegged at $2.56 per share.
Analog Devices anticipates non-GAAP operating margins of 48.5% (+/- 70 bps).
Zacks Rank & Stocks to Consider
Currently, Analog Devices carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider some better-ranked stocks like Ciena CIEN, CrowdStrike CRWD and AMETEK AME. Ciena, CrowdStrike and AMETEK, each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ciena shares have lost 14.9% in the year-to-date time frame. The Zacks Consensus Estimate for CIEN’s fiscal year 2023 earnings is pegged at $2.81 per share, suggesting an increase of 47.9% from the prior year’s reported figure.
CrowdStrike shares have risen 27% in the year-to-date period. The Zacks Consensus Estimate for CRWD’s 2023 earnings is pegged at $2.30 per share, suggesting an increase of 49.4% from the prior year’s reported figure.
AMETEK shares have rallied 3.4% year to date. The Zacks Consensus Estimate for AME’s 2023 earnings is pegged at $6.11 per share, suggesting an increase of 7.57% from the prior year’s reported figure.
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