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Analog Devices (ADI) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Analog Devices, Inc. ADI is slated to report third-quarter fiscal 2019 results on Aug 21, before the opening bell.

The company’s earnings surprise history has been impressive, as it surpassed estimates in each of the last four quarters, with an average of 3.82%.

Analog Devices, Inc. Price and EPS Surprise


Analog Devices, Inc. Price and EPS Surprise

Analog Devices, Inc. price-eps-surprise | Analog Devices, Inc. Quote

Factors at Play

Analog Devices has been benefiting from strength in industrial, automotive, consumer and communications markets, along with increased focus on innovation and operational execution. These remain positives for the to-be-reported quarter as well.

The automotive electronics market should gain from consumer demand for added technology and features in new vehicles, along with the transition to hybrid and electric vehicles. Therefore, we expect automotive revenues to further increase in the to-be-reported quarter. The Zacks Consensus Estimate for automotive revenues is pegged at $237 million.

Also, the communications market should perform well in the quarter to be reported, driven by strength in the wireless segment. The accelerated build out of TD-LTE in China, continuing 4G network densification activities in the United States and expected deployments in Europe should benefit the communications segment. The Zacks Consensus Estimate for communications is pegged at $294 million.

However, softness in the consumer market is a major negative. Also, macroeconomic headwinds and geopolitical uncertainty remained overhangs during the quarter. Further, rising competitive pressure from Maxim and Texas Instruments may impact its upcoming results.

For the fiscal third quarter, the Zacks Consensus Estimate for revenues from industrial and consumer is pegged at $754 million and $166 million, respectively.

Earnings Whispers

Per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings estimates. That is not the case here as you will see below.

Earnings ESP: The Earnings ESP for the stock is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Analog Devices has a Zacks Rank #4 (Sell), which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Strong Sell) going into the earnings announcement.

Stocks to Consider

We see a likely earnings beat for each of the following companies in the upcoming releases:

Infosys Limited INFY has an Earnings ESP of +3.28% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Teradyne, Inc. TER has an Earnings ESP of +0.23% and a Zacks Rank #2.

Texas Instruments Incorporated TXN has an Earnings ESP of +0.50% and a Zacks Rank #2.

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