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Analog Devices (ADI) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 min read

Analog Devices (ADI) closed at $138.01 in the latest trading session, marking a +1.28% move from the prior day. The stock outpaced the S&P 500's daily gain of 1.17%. At the same time, the Dow added 1.6%, and the tech-heavy Nasdaq gained 0.8%.

Coming into today, shares of the semiconductor maker had gained 9.91% in the past month. In that same time, the Computer and Technology sector gained 0.8%, while the S&P 500 gained 2.26%.

Investors will be hoping for strength from ADI as it approaches its next earnings release, which is expected to be November 24, 2020. The company is expected to report EPS of $1.32, up 10.92% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.44 billion, up 0.01% from the year-ago period.

Investors might also notice recent changes to analyst estimates for ADI. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ADI is holding a Zacks Rank of #4 (Sell) right now.

Digging into valuation, ADI currently has a Forward P/E ratio of 24.17. This valuation marks a discount compared to its industry's average Forward P/E of 30.34.

Also, we should mention that ADI has a PEG ratio of 2.42. 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 2.43 as of yesterday's close.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 52, putting it in the top 21% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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Zacks Investment Research