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Analog Devices (ADI) Outpaces Stock Market Gains: What You Should Know

Analog Devices (ADI) closed at $116.57 in the latest trading session, marking a +1.5% move from the prior day. This move outpaced the S&P 500's daily gain of 0.72%. Meanwhile, the Dow gained 0.89%, and the Nasdaq, a tech-heavy index, added 1.47%.

Prior to today's trading, shares of the semiconductor maker had lost 5.27% over the past month. This has lagged the Computer and Technology sector's gain of 7.08% and the S&P 500's gain of 5.85% in that time.

ADI will be looking to display strength as it nears its next earnings release, which is expected to be August 19, 2020. In that report, analysts expect ADI to post earnings of $1.01 per share. This would mark a year-over-year decline of 19.84%. Meanwhile, our latest consensus estimate is calling for revenue of $1.45 billion, down 1.98% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.65 per share and revenue of $5.49 billion. These totals would mark changes of -9.71% and -8.29%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for ADI. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 8.9% higher. ADI currently has a Zacks Rank of #2 (Buy).

Investors should also note ADI's current valuation metrics, including its Forward P/E ratio of 24.7. This valuation marks a discount compared to its industry's average Forward P/E of 38.47.

Meanwhile, ADI's PEG ratio is currently 1.85. 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. ADI's industry had an average PEG ratio of 2.55 as of yesterday's close.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 59, putting it in the top 24% 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 the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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