Analog Devices (ADI) To Report Q4 Earnings: What's In Store?

Analog Devices, Inc. (NASDAQ:ADI) will report fourth-quarter fiscal 2018 results on Nov 20, before the bell.

The company’s earnings surprise history has been impressive, as it surpassed estimates in each of the last four quarters, with average of 6.64%.

Moreover, the stock has gained 0.9% on a year-to-date basis against the industry’s decline of 14.3%.

Let’s see how things are shaping up for this announcement.

Third-Quarter Snapshot

Analog Devices, one of the world leaders in the design, manufacture and marketing of high-performance analog, mixed-signal and digital signal processing integrated circuits, generated revenues of $1.57 billion, up 7.8% year over year and 3.9% sequentially. The strong growth was driven by robust performance from industrial, automotive and communications end-markets.

Factors at Play in the Quarter

Analog Devices has been benefiting from strength in industrial, automotive, consumer and communications markets, along with increased focus on innovation and operational execution. While its investments are aimed at strengthening the product line and fending off competition, the policy of returning cash through dividends and share buybacks will ensure investor loyalty.

In the fiscal third quarter, Automotive revenues jumped 6% from the year-ago quarter to $246.9 million. The automotive electronics market should continue to gain from consumer demand for added technology and features in new vehicles, along with the transition to hybrid and electric vehicles. Therefore, we expect automotive revenues to further increase in the to-be-reported quarter. The Zacks Consensus Estimate for automotive revenues is pegged at $252 million.

Also, the communications market should perform well in the quarter to be reported, driven by strength in the wireless segment. The accelerated build out of TD-LTE in China, continuing 4G network densification activities in the United States and expected deployments in Europe should benefit the communications segment. The Zacks Consensus Estimate for communications is pegged at $332 million.

For the fiscal fourth quarter, the Zacks Consensus Estimate for industrial and consumer is pegged at $803 million and $184 million, respectively.

Earnings Whispers

Per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings estimates. That is not the case here as you will see below.

Earnings ESP: The Earnings ESP for the stock is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Analog Devices has a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell rated) going into the earnings announcement.

Stocks to Consider

We see a likely earnings beat for each of the following companies:

NetApp, Inc. (NASDAQ:NTAP) has an Earnings ESP of +4.80% and a Zacks Rank #2.

Semtech Corporation (NASDAQ:SMTC) has an Earnings ESP of +1.64% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

VMware, Inc. (NYSE:VMW) has an Earnings ESP of +0.55% and a Zacks Rank #3.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>