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

Zacks Equity Research

Analog Devices Inc. ADI 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 revenues were up 3% sequentially on 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 shrunk 350 bps on a year-over-year basis to 38% during the reported quarter.

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


Balance Sheet & Cash Flow

At the end of the fiscal second quarter, cash and cash equivalents were $784.9 million, up from $654.4 million at the end of the fiscal first quarter.

Long-term debt was $5.1 billion, up from the previous quarter’s $4.7 billion.

Net cash provided by operations was $429 million in the fiscal second quarter, up from the $349.6 million witnessed in the last 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). The Zacks Consensus Estimate for the same is pegged at $1.34 billion.

Non-GAAP earnings are estimated to be $1.08 (+/- $0.11) per share. The consensus mark for the same is pegged at $1.06 per share.

The company anticipates non-GAAP operating margins to be 38.3% (+/- 150 bps).

Zacks Rank & Key Picks

Analog Devices currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector include Wayfair Inc. W, MONOTARO MONOY and Inphi Corporation IPHI, each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Wayfair, Inuvo, and Inphi is currently projected at 23.04%, 17.2% and 37.7%, respectively.

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