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

Zacks Equity Research
·3 min read

Analog Devices (ADI) closed at $118.48 in the latest trading session, marking a -0.04% move from the prior day. This change lagged the S&P 500's 1.23% gain on the day. Elsewhere, the Dow gained 1.6%, while the tech-heavy Nasdaq added 0.42%.

Heading into today, shares of the semiconductor maker had lost 0.39% over the past month, outpacing the Computer and Technology sector's loss of 1.34% and the S&P 500's loss of 2.51% in that time.

ADI will be looking to display strength as it nears 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. Our most recent consensus estimate is calling for quarterly revenue of $1.44 billion, up 0.01% from the year-ago period.

ADI's full-year Zacks Consensus Estimates are calling for earnings of $4.79 per share and revenue of $5.52 billion. These results would represent year-over-year changes of -6.99% and -7.86%, respectively.

Investors should also note any 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ADI is holding a Zacks Rank of #4 (Sell) right now.

Looking at its valuation, ADI is holding a Forward P/E ratio of 24.77. Its industry sports an average Forward P/E of 34.32, so we one might conclude that ADI is trading at a discount comparatively.

It is also worth noting that ADI currently has a PEG ratio of 2.48. 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. ADI's industry had an average PEG ratio of 2.44 as of yesterday's close.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 61, which puts it in the top 25% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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