Here’s Why Analog Devices (ADI) Fell More Than the Entire Market

Analog Devices (ADI) ended the most recent trading day at $233.74, falling -1.93% from the previous trading session. This change lagged the S&P 500’s 0.88% loss on the day. Meanwhile, the Dow gained 0.08%, and the Nasdaq, a tech-heavy index, lost 1.95%.

Shares of the semiconductor maker have fallen 0.05% over the past month, out of line with a 9.48% decline in the Computer and Technology sector and a 5.11% decline in the S&P 500.

Analysts and investors will be closely watching Analog Devices’ results in its upcoming earnings call. On that day, Analog Devices is expected to report earnings of $1.50 per share, which would represent a year-over-year decline of 39.76%. Meanwhile, our current consensus is for revenue of $2.27 billion, representing a decline of 26.09% from the prior-year quarter.

For the full year, the Zacks Consensus Estimates are calling for earnings of $6.24 per share and revenue of $9.31 billion, which would represent changes of -38.16% and -24.34%, respectively, from the prior year.

It’s also important to note the recent changes in analyst estimates for Analog Devices. Such recent modifications typically signify a changing landscape for near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business prospects.

Our research suggests that these estimate changes have a direct correlation to a stock’s upcoming performance, and we’ve developed the Zacks Rank to take advantage of this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 delivering an average annual return of +25% since 1988. Over the past 30 days, the Zacks Consensus EPS estimate has moved 0.4% higher. Analog Devices currently has a Zacks Rank #2 (Buy).

In terms of valuation, Analog Devices stock is currently trading at a Forward P/E ratio of 38.19. This indicates no noticeable deviation from the industry’s average Forward P/E of 38.19.

We can further note that ADI currently boasts a PEG ratio of 4.02. 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. Semiconductor – Analog and Mixed held an average PEG ratio of 3.41 at yesterday’s closing price.

The Semiconductors – Analog and Mixed industry is a part of the Computers & Technology sector. The industry currently has a Zacks Industry Rank of 167, which puts it in the bottom 34% of all 250+ industries.

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

Be sure to rely on Zacks.com to track all of these and other metrics that impact stock performance in subsequent trading sessions.

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