Analog devices (ADI) Better results and revenues in the second quarter, autumn y/y

Analog Devices Inc. ADI reported second-quarter fiscal 2024 adjusted earnings of $1.40 per share, beating the Zacks Consensus Estimate by 11.1%. The financial result decreased by 51% compared to the same quarter last year.

Revenues of $2.16 billion surpassed the Zacks Consensus Estimate of $2.10 billion. Revenues were down 34% compared to the same quarter last year.

The main downside was softness in the telecommunications, consumer, automotive and industrial end markets.

Analog Devices, Inc. Price, consensus and EPS surprise

Analog Devices, Inc. consensus price-eps-surprise chart | Analog Devices, Inc. offer

Revenue by end market

Industrial: The market generated revenue of $1.01 billion (representing 47% of total revenue), down 44% year-over-year. The figure surpassed the Zacks Consensus Estimate of $965.7 million.

Communication: Market revenues amounted to $240.78 million (11% of revenues), a 45% decrease compared to the same quarter last year. This number is below the Zacks Consensus Estimate of $253.6 million.

Automotive: Market revenues amounted to $658.24 million (30% of revenues), a 10% decrease compared to the same quarter last year. The figure surpassed the Zacks Consensus Estimate of $652.8 million.

Consumer: The market generated revenue of $245.18 million (11% of revenue), a 9% decline compared to the same quarter last year. The figure surpassed the Zacks Consensus Estimate of $232.3 million.

Operational details

Adjusted gross margin decreased 700 basis points (bps) from the year-ago quarter to 66.7%.

Adjusted operating expenses were $597.74 million, down 18.5% from the same quarter last year. Adjusted operating expenses as a percentage of revenue were 27.7%, up 520 basis points year-over-year.

Adjusted operating margin was 39% in the reported quarter, well below the 51.2% recorded in the year-ago quarter.

Balance sheet and cash flow

As of May 4, 2024, cash and cash equivalents were $1.94 billion, compared to $1.3 billion as of February 3, 2024.

Long-term debt was $6.61 billion at the end of the second quarter of fiscal 2024, compared to $5.95 billion at the end of the first quarter of fiscal 2024.

Net cash provided by operating activities was $808 million in the reported quarter, compared to $1.14 billion in the prior fiscal quarter.

ADI generated $620 million of free cash flow in its fiscal second quarter.

In the second fiscal quarter, Analog Devices returned $678 million to its shareholders, of which dividend payments amounted to $456 million and shares repurchased amounted to $222 million.

Conductivity

For the third quarter of fiscal 2024, ADI expects revenue of $2.27 billion (+/- $100 million). The Zacks Consensus Estimate for this stock is $2.16 billion.

Non-GAAP earnings are expected to be $1.50 (+/- $0.10) per share. The consensus on this issue was set at $1.35 per share.

Analog Devices anticipates non-GAAP operating margin of 40% (+/- 100 basis points).

Zacks Rank and Stocks to Consider

Analog Devices is currently sporting a Zacks Rank of #4 (Sell).

Some stocks in the broader technology sector are performing better Dell Technologies DELL, Crowd blow CRWD i Intuition INTU, each currently carrying a Zacks Rank #2 (Buy). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dell Technologies shares are up 93.9% year to date. DELL’s long-term earnings growth rate is 12%.

CrowdStrike shares are up 36.8% year to date. CRWD’s long-term earnings growth rate is currently projected at 22.31%.

Intuit shares are up 7.2% year to date. INTU’s long-term earnings growth rate is 14.57%.

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