Is now the time to consider buying Analog Devices, Inc. (NASDAQ:ADI)?

Let’s talk about the popular company Analog Devices, Inc. (NASDAQ:ADI). Over the past few months, the company’s stock on the NASDAQGS has seen a significant price increase of 26%. Due to the recent increase in the share price, the company is now trading at yearly highs. Since many analysts cover large-cap stocks, we can expect that any price-sensitive announcements have already been factored into the company’s share price. But what if the stock is still a bargain? Let’s look at Analog Devices’ valuation and outlook in more detail to determine if there’s still a bargain opportunity there.

See our latest analysis for analog devices

Are analog devices still cheap?

According to our valuation model, Analog Devices appears to be fairly valued at approximately 1.60% above our intrinsic value, which means that if you buy Analog Devices today, you will be paying a relatively fair price for it. And if you believe the company’s true value is $227.56, the price drop to its true value only causes a slight disadvantage. Is there still a chance for cheap shopping in the future? Since the Analog Devices share price is quite volatile, we could potentially see the price drop (or rise) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator of share price movement relative to the rest of the market.

How much growth will Analog Devices generate?

Investors looking for growth in their portfolio may want to consider a company’s prospects before purchasing its shares. Buying a great company with a solid outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With earnings expected to grow 76% over the next few years, the future seems bright for Analog Devices. It appears that higher cash flows are expected for the stock, which should translate into a higher share valuation.

What does this mean for you

Are you a shareholder? The optimistic future growth of ADI appears to have been factored into the current share price, with shares trading close to their fair value. However, there are also other important factors that we haven’t covered today, such as the track record of the management team. Have these factors changed since you last looked at the stock? Would you have enough confidence to invest in the company if the price dropped below its fair value?

Are you a potential investor? If you’ve been keeping an eye on ADI, now may not be the best time to buy, given that it is trading around its fair value. However, the optimistic outlook is encouraging for the company, which means it’s worth taking a deeper look at other factors, such as the strength of its balance sheet, to take advantage of the next price cut.

Diving into the analog outlook mentioned earlier will help you understand how analysts view the stock going forward. So we encourage you to check out our free chart showing analyst forecasts.

If you are no longer interested in Analog Devices, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is of a general nature. We comment based on historical data and analyst forecasts, using only an unbiased methodology, and our articles are not intended to provide financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative content. Simply Wall St has no position in any of the stocks mentioned.

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