Robust Portfolio to Drive Analog Devices (ADI) Q1 Earnings
Analog Devices, Inc. ADI is set to report first-quarter fiscal 2018 results on Feb 28.
The company topped the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive earnings surprise of 16.34%.
Last quarter, Analog Devices delivered a positive earnings surprise of 5.84%. Earnings of $1.45 per share went up 15.1% sequentially and 38.1% on a year-over-year basis. Revenues also increased 7.5% sequentially and 53.6% year over year to $1.54 billion. Top-line growth was driven by strong end market results.
Seasonality to Hurt Q1 Results
For first-quarter fiscal 2018, revenues are anticipated in the range of $1.44-$1.54 billion. Non-GAAP earnings are expected between $1.20 and $1.36 per share.
The first-quarter that ended on Jan 31, 2018 was a 14-week quarter. Management expects a full week's revenue benefit from this extra week. However, post adjusting revenues for this extra week, total revenues are anticipated to decline sequentially at the mid-point of the guidance range.
Moreover, Analog Devices had expected B2B markets of industrial, automotive and communications in aggregate to decrease in the mid-single-digits sequentially in the seasonally slower first quarter. However, revenues were expected to increase on a year-over-year basis due to strength in the industrial end-market.
Let’s see how things are shaping up for this announcement.
Analog Devices, Inc. Price and EPS Surprise
Analog Devices, Inc. Price and EPS Surprise | Analog Devices, Inc. Quote
Strong End Markets, Portfolio: Key Catalysts
We expect strength across all the four end-markets — Industrial, Consumer, Communications and Automotive — to drive the soon-to-be reported quarter results. Moreover, ongoing investments are likely to strengthen product portfolio as well as competitive position, which will boost the top line.
We believe that top-line growth is likely to be driven by Analog Devices’ diversified product portfolio and expanding customer base. Moreover, higher contribution from Linear Technology acquisition remains a tailwind.
Further, Analog Devices is likely to benefit from increasing demand for autonomous driving solutions. Additionally, continuing demand for high value signal processing & power management applications, software-defined radio solutions and portable applications are anticipated to drive the top line.
The Zacks Consensus Estimate for Industrial, Automotive, Communication and Consumer segment revenues are currently pegged at $704 million, $231 million, $272 million and $234 million, respectively.
What Our Model Suggests
According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Analog Devices has a Zacks Rank #3 and its Earnings ESP is +0.16%. Therefore, our proven model shows that the company is likely to deliver a positive surprise this quarter.
Other Stocks That Warrant a Look
Here are a few other stocks worth considering as our model shows that these have the right combination of elements to deliver an earnings beat in the upcoming releases.
Micron Technology MU has an Earnings ESP of +1.12% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Autodesk ADSK has an Earnings ESP of +17.98% and a Zacks Rank #3.
Broadcom AVGO has an Earnings ESP of +1.08% and a Zacks Rank #3.
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