The Gory Details on Analog Devices' Double Fumble

Seth Jayson, The Motley Fool
Updated

Analog Devices (NYS: ADI) reported earnings on Feb. 22. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Feb. 4 (Q1), Analog Devices missed estimates on revenue and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue dropped and GAAP earnings per share dropped significantly.

Margins dropped across the board.

Revenue details
Analog Devices tallied revenue of $648.1 million. The 22 analysts polled by S&P Capital IQ wanted to see net sales of $662.3 million on the same basis. GAAP reported sales were 11% lower than the prior-year quarter's $728.5 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.46. The 21 earnings estimates compiled by S&P Capital IQ averaged $0.48 per share. GAAP EPS of $0.46 for Q1 were 36% lower than the prior-year quarter's $0.72 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 63.2%, 300 basis points worse than the prior-year quarter. Operating margin was 28.7%, 690 basis points worse than the prior-year quarter. Net margin was 21.5%, 900 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $666.2 million. On the bottom line, the average EPS estimate is $0.54.

Next year's average estimate for revenue is $2.77 billion. The average EPS estimate is $2.26.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 388 members out of 420 rating the stock outperform, and 32 members rating it underperform. Among 137 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 129 give Analog Devices a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Analog Devices is outperform, with an average price target of $38.60.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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