Analog Devices (ADI) Q3 Earnings & Revenues Beat, Rise Y/Y
Analog Devices Inc. ADI reported third-quarter fiscal 2022 adjusted earnings of $2.52 per share, beating the Zacks Consensus Estimate by 3.7%. The bottom line rose 47% year over year.
Revenues of $3.11 billion surpassed the Zacks Consensus Estimate of $3.06 billion. Also, the top line improved 77% year over year.
The strong performance delivered by Analog Devices across the industrial, automotive, consumer and communications markets drove the top line.
Although the pandemic-led supply challenges remained headwinds to ADI, its high-performance analog, mixed-signal and power portfolio contributed well.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Analog Devices, Inc. price-consensus-eps-surprise-chart | Analog Devices, Inc. Quote
Revenues by End Markets
Industrial: Analog Devices generated revenues of $1.56 billion (accounting for 50% of the total revenues), which grew 55% year over year.
Communications: Revenues from the market were $490.7 million (16% of revenues), increasing 69% year over year.
Automotive: Revenues from the market summed $659.1 million (21% of revenues), up 127% from the year-ago quarter’s level.
Consumer: The market generated revenues of $404.98 million (13% of revenues), reflecting 136% growth on a year-over-year basis.
Operating Details
The adjusted gross margin expanded 250 basis points (bps) on a year-over-year basis to 74.1%.
Adjusted operating expenses were $746.6 million, up 51.5% from the year-ago quarter’s level. As a percentage of revenues, adjusted operating expenses were 24%, contracting 400 bps year over year.
The adjusted operating margin expanded 650 bps on a year-over-year basis to 50.1% in the reported quarter.
Balance Sheet & Cash Flow
As of Jul 30, 2022, cash and cash equivalents were $1.5 billion, down from $1.7 billion as of Apr 30, 2022.
Long-term debt was $6.252 billion at the end of the fiscal third quarter compared with $6.253 billion at the end of the fiscal second quarter.
Net cash provided by operations was $1.25 million in the reported quarter, up from $1.22 billion in the prior quarter.
ADI generated $1.08 billion of free cash flow in the fiscal third quarter.
Additionally, Analog Devices returned $1.3 billion to its shareholders, of which dividend payments account for $394 million and repurchased shares amount to $906 million in the fiscal third quarter.
Guidance
For fourth-quarter fiscal 2022, ADI expects revenues of $3.15 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $3.11 billion.
Non-GAAP earnings are expected to be $2.57 (+/- $0.10) per share. The consensus mark for the same is pegged at $2.50 per share.
Analog Devices anticipates non-GAAP operating margins of 50.3% (+/- 70 bps).
Zacks Rank & Stocks to Consider
Currently, Analog Devices carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Arista Networks ANET, Keysight Technologies KEYS and ASE Technology ASX. While Arista Networks sports a Zacks Rank #1 (Strong Buy), Keysight Technologies and ASE Technology carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks has lost 9.6% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 18.9%.
Keysight Technologies has lost 17.4% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.
ASE technology has lost 19.2% in the year-to-date period. The long-term earnings growth rate for ASX is currently projected at 23.1%.
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