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Analog Devices (ADI) Q2 Earnings & Revenues Beat, Rise Y/Y

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 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

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.

Guidance

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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