Does Analog Devices Inc. (ADI) offer a good opportunity for investors?

Analog Devices Inc. (NASDAQ: ADI) stock fell -2.09% on Friday to $145.34 against a previous-day closing price of $148.44. With 3.35 million shares changed hands, the volume of the stock remained heavier than its average volume of 3.2 million shares. During the session, the Semiconductors company that operates in wider Technology sector, reached to the highest price of $148.33 whereas the lowest price it dropped to was $144.22. The 52-week range on ADI shows that it touched its highest point at $191.95 and its lowest point at $138.50 during that stretch. It currently has a 1-year price target of $195.18. With its current market cap of 74.03 billion, ADI has annualized dividend of $3.04 while the current yield stands at 2.09%. Beta for the stock currently stands at 1.16.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of ADI was down-trending over the past week, with a drop of -1.71%, but this was down by -11.60% over a month. Three-month performance dropped to -0.14% while six-month performance fell -8.67%. The stock lost -16.40% in the past year, while it has lost -17.31% so far this year. A look at the trailing 12-month EPS for ADI yields 3.61 with Next year EPS estimates of 9.57. For the next quarter, that number is 2.59. This implies an EPS growth rate of 5.60% for this year and 1.42% for next year. EPS is expected to grow by 16.63% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 4.70%.

Float and Shares Shorts:

At present, 517.01 million ADI shares are outstanding with a float of 509.60 million shares on hand for trading. On Aug 30, 2022, short shares totaled 8.64 million, which was 1.68% higher than short shares on Jul 28, 2022. In addition to Mr. Vincent T. Roche as the firm’s CEO & Chair of the Board of Directors, Dr. Raymond S. Stata Ph.D. serves as its Co-Founder & Board Member.

Institutional Ownership:

Through their ownership of 88.46% of ADI’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 52.48% of ADI, in contrast to 36.20% held by mutual funds. Shares owned by individuals account for 0.75%. As the largest shareholder in ADI with 8.50% of the stake, The Vanguard Group, Inc. holds 43,701,789 shares worth 43,701,789. A second-largest stockholder of ADI, BlackRock Fund Advisors, holds 24,473,010 shares, controlling over 4.76% of the firm’s shares. SSgA Funds Management, Inc. is the third largest shareholder in ADI, holding 20,164,314 shares or 3.92% stake. With a 2.99% stake in ADI, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 15,387,031 shares are owned by the mutual fund manager. The Vanguard 500 Index Fund, which owns about 2.27% of ADI stock, is the second-largest Mutual Fund holder. It holds 11,678,927 shares valued at 1.77 billion. Invesco QQQ Trust holds 1.46% of the stake in ADI, owning 7,485,697 shares worth 1.13 billion.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jul 29, 2022, ADI reported revenue of $2.97B and operating income of $964.84M. The EBITDA in the recently reported quarter was $1.55B and diluted EPS was $1.49.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for ADI since 27 analysts follow the stock currently. There are 15 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 7 believe that the stock is worth HOLDING, 5 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With ADI analysts setting a high price target of $220.00 and a low target of $170.00, the average target price over the next 12 months is $193.77. Based on these targets, ADI could surge 51.37% to reach the target high and rise by 16.97% to reach the target low. Reaching the average price target will result in a growth of 33.32% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. ADI will report FY 2022 earnings on 11/22/2022. Analysts have provided yearly estimates in a range of $9.60 being high and $9.41 being low. For ADI, this leads to a yearly average estimate of $9.44. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Analog Devices Inc. surprised analysts by $0.09 when it reported $2.52 EPS against a consensus estimate of $2.43. The surprise factor in the prior quarter was $0.29. Based on analyst estimates, the high estimate for the next quarter is $2.75 and the low estimate is $2.56. The average estimate for the next quarter is thus $2.59.

Dividends & Yield:

In terms of dividends, ADI has a current ratio of $3.04, which is $3.04 over the trailing 12-months, while a dividend of $2.27 is likely to be paid on average over the next five years. Dividend yield is another indicator that appeals to many investors, and ADI currently yields $2.04. In the past year, ADI’s dividend yield has been $2.04, but when looking at the stock over the past five years, its yield has been $1.88. Accordingly, ADI has a current buyback yield of $5.83. This was $5.83 for the TTM, and it was $1.27 for the past five years.

Summary of Insider Activity:

Insiders traded ADI stock several times over the past three months with 1 Buys and 15 Sells. In these transactions, 3,053 shares were bought while 41,418 shares were sold. The number of buy transactions has increased to 37 while that of sell transactions has risen to 83 over the past year. The total number of shares bought during that period was 111,559 while 262,663 shares were sold.

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