Analog Devices (ADI) Q4 Earnings Meet, Revenues Fall Y/Y
Analog Devices Inc. ADI delivered fourth-quarter fiscal 2023 adjusted earnings of $2.01 per share, which came in line with the Zacks Consensus Estimate. The bottom line declined 26% from the year-ago quarter’s reported figure.
Revenues of $2.716 billion beat the Zacks Consensus Estimate of $2.713 billion. The top line fell 16% from the year-ago quarter’s reported figure.
Softness in communications, consumer and industrial markets was a major negative.
Nevertheless, the company witnessed solid momentum across the automotive markets during the reported quarter.
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: The market generated revenues of $1.35 billion (accounting for 50% of the total revenues), which fell 20% year over year. The figure missed the Zacks Consensus Estimate of $1.41 million.
Communications: Revenues from the market were $340.2 million (13% of revenues), decreasing 32% from the year-ago fiscal quarter’s reported figure. The figure surpassed the Zacks Consensus Estimate of $332 million.
Automotive: Revenues from the market summed up to $731.4 million (27% of revenues), up 14% from the year-ago fiscal quarter’s level. The figure surpassed the Zacks Consensus Estimate of $678 million.
Consumer: The market generated revenues of $291.4 million (11% of revenues), reflecting a 28% decline from the year-ago fiscal quarter’s reported figure. The figure came below the Zacks Consensus Estimate of $295 million.
Operating Details
The adjusted gross margin contracted 380 basis points (bps) from the year-ago fiscal quarter’s level to 70.2%.
Adjusted operating expenses were $692.1 million, down 6.9% from the year-ago fiscal quarter’s level. As a percentage of revenues, adjusted operating expenses were 25.5%, expanding 260 bps year over year.
The adjusted operating margin contracted 640 bps on a year-over-year basis to 44.7% in the reported quarter.
Balance Sheet & Cash Flow
As of Oct 28, 2023, cash and cash equivalents were $958.1 billion, down from $1.15 billion as of Jul 29, 2023.
Long-term debt was $5.9 billion at the end of the fiscal fourth quarter compared with $6.44 billion at the end of the fiscal third quarter.
Net cash provided by operations was $1.19 billion in the reported quarter, up from $1.14 billion in the prior fiscal quarter.
ADI generated $711 million of free cash flow in the fiscal fourth quarter.
Analog Devices returned $898 million to its shareholders in the fiscal fourth quarter, of which dividend payments accounted for $428 million and repurchased shares amounted to $470 million.
Guidance
For first-quarter fiscal 2024, ADI expects revenues of $2.50 billion (+/- $100 million). The Zacks Consensus Estimate for the same is pegged at $2.70 billion.
Non-GAAP earnings are expected to be $1.70 (+/- $0.10) per share. The consensus mark for the same is pinned at $1.94 per share.
Analog Devices anticipates non-GAAP operating margins of 41.5% (+/- 70 bps).
Zacks Rank & Stocks to Consider
Currently, Analog Devices carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Badger Meter BMI, Arista Networks ANET and Salesforce CRM. Badger Meter sports a Zacks Rank #1 (Strong Buy), and Arista Networks and Salesforce each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Badger Meter have gained 24.8% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.
Shares of Arista Networks have surged 56.4% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 19.77%.
Shares of Salesforce have gained 57.4% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 22.54%.
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