Analog Devices (ADI) Outperforms Stock Market Gains: What You Need to Know

Analog Devices (ADI) ended the most recent trading session at USD 181.43, marking a rise of 1.01% from the previous day. This change outpaced the S&P 500 Index’s daily gain of 0.45%. Meanwhile, the Dow lost 0.09% and the Nasdaq, a technology-based index, gained 35%.

Heading into today, shares of the semiconductor maker have lost 5.17% over the past month, lagging the Computer & Technology sector’s gain of 0.17% and the S&P 500’s gain of 0.44% in that time.

Analog Devices will be looking to display strength ahead of its upcoming earnings release on May 24, 2023. On that date, Analog Devices is expected to report earnings per share of $2.74, which would represent year-over-year earnings growth by 14.17%. Our latest consensus estimate is calling for quarterly revenue of $3.2 billion, up 7.6% from the year-ago period.

For the full year, our Zacks Consensus Estimates suggest that analysts are expecting earnings of $10.60 per share and revenue of $12.65 billion. These totals would represent changes of +10.76% and +5.31%, respectively, compared to last year.

Investors should also note any recent changes to analyst estimates for analog. These changes typically reflect recent short-term business trends, which may change frequently. As a result, we can consider positive estimate revisions as a good forecast for the company’s business prospects.

Based on our research, we believe these estimate revisions are directly related to stock movements across the board. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive, outside-audited track record of outperformance, with #1 stocks generating an average annual return of + 25% since 1988. The Zacks Consensus EPS estimate remained unchanged over the past month. Analog is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note Analog Devices’ current valuation metrics, including its Forward P/E ratio of 16.94. For comparison, the average P/E ratio in this industry is 16.94, which means that Analog Devices’s stock price does not show any noticeable deviation from the group’s price.

It’s also worth noting that ADI currently has a PEG ratio of 1.38. This popular ratio is similar to the commonly known P/E ratio, with the difference that the PEG ratio also takes into account the expected growth dynamics of the company’s earnings. The Semiconductor – Analog and Mixed Index held an average PEG ratio of 1.38 at yesterday’s closing price.

The semiconductor – analog and mixed industry is part of the computer and technology sector. This group has a Zacks Industry Rank of 125, putting it in the top 50% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that industries that receive a top 50% rating outperform the bottom half by a factor of 2 to 1.

To track ADI in the upcoming trading sessions, be sure to stay tuned to Zacks.com.

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