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Analog Devices (ADI) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 min read

Analog Devices (ADI) closed at $120.29 in the latest trading session, marking a -0.69% move from the prior day. This change lagged the S&P 500's daily loss of 0.3%. Elsewhere, the Dow lost 0.8%, while the tech-heavy Nasdaq added 0.64%.

Prior to today's trading, shares of the semiconductor maker had gained 3.48% over the past month. This has lagged the Computer and Technology sector's gain of 4.11% and outpaced the S&P 500's gain of 3.25% in that time.

Investors will be hoping for strength from ADI as it approaches its next earnings release. The company is expected to report EPS of $1.32, up 10.92% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.44 billion, up 0.01% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.79 per share and revenue of $5.52 billion. These totals would mark changes of -6.99% and -7.86%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for ADI. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ADI currently has a Zacks Rank of #4 (Sell).

Investors should also note ADI's current valuation metrics, including its Forward P/E ratio of 25.32. This represents a discount compared to its industry's average Forward P/E of 34.33.

We can also see that ADI currently has a PEG ratio of 2.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Semiconductor - Analog and Mixed industry currently had an average PEG ratio of 2.49 as of yesterday's close.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 92, which puts it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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