Analog Devices (ADI) Exceeds Market Returns: Some Facts to Consider

Analog Devices (ADI) ended the recent trading session at $245.15, demonstrating a +1.87% change from the preceding day's closing price. The stock's performance was ahead of the S&P 500's daily gain of 0.48%. Elsewhere, the Dow saw a downswing of 0.02%, while the tech-heavy Nasdaq appreciated by 0.94%.

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The stock of semiconductor maker has risen by 10.17% in the past month, leading the Computer and Technology sector's gain of 7.61% and the S&P 500's gain of 5.13%.

The investment community will be paying close attention to the earnings performance of Analog Devices in its upcoming release. The company's earnings per share (EPS) are projected to be $1.92, reflecting a 21.52% increase from the same quarter last year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.76 billion, up 19.18% from the year-ago period.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $7.39 per share and revenue of $10.6 billion. These totals would mark changes of +15.83% and +12.49%, respectively, from last year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Analog Devices. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.26% increase. Analog Devices is holding a Zacks Rank of #3 (Hold) right now.

In the context of valuation, Analog Devices is at present trading with a Forward P/E ratio of 32.57. This indicates a discount in contrast to its industry's Forward P/E of 39.67.

Meanwhile, ADI's PEG ratio is currently 2.22. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ADI's industry had an average PEG ratio of 2.24 as of yesterday's close.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 176, which puts it in the bottom 29% of all 250+ industries.

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

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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