Analog Devices, Inc. (ADI) | Investment Case

1. Company Snapshot

1.a. Company Description

Analog Devices, Inc.designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems that leverage analog, mixed-signal, and digital signal processing technologies.The company provides data converter products, which translate real-world analog signals into digital data, as well as translates digital data into analog signals; power management and reference products for power conversion, driver monitoring, sequencing, and energy management applications in the automotive, communications, industrial, and high-end consumer markets; and power ICs include performance, integration, and software design simulation tools for accurate power supply designs.

It also offers high-performance amplifiers to condition analog signals; and radio frequency and microwave ICs to support cellular infrastructure; and microelectromechanical systems technology solutions, including accelerometers used to sense acceleration, gyroscopes for sense rotation, inertial measurement units to sense multiple degrees of freedom, and broadband switches for radio and instrument systems, as well as isolators.In addition, the company offers digital signal processing and system products for high-speed numeric calculations.It serves clients in the industrial, automotive, consumer, instrumentation, aerospace, and communications markets through a direct sales force, third-party distributors, and independent sales representatives in the United States, the rest of North and South America, Europe, Japan, China, and rest of Asia, as well as through its Website.

Analog Devices, Inc.was incorporated in 1965 and is headquartered in Wilmington, Massachusetts.

Show Full description

1.b. Last Insights on ADI

Analog Devices' recent performance is driven by strong Q4 results, with revenues rising year-over-year and margins expanding. The company's growth is fueled by broad segment gains, particularly in industrial, communications, and consumer demand. Technological advancements in electric vehicles, low earth orbit satellites, and systems-level solutions are accelerating growth drivers. A strong dividend and buyback yield, along with cash accumulation and tariff recovery, support a positive outlook. Additionally, institutional investors, such as Acadian Asset Management LLC, have taken new positions in the company, purchasing 11,669 shares.

1.c. Company Highlights

Last Price	277.26
Change Percentage	-0.35%
Open	276.62
Previous Close	278.24
Market Cap ( Millions)	137072
Volume	3219608
Year High	279.5
Year Low	158.65
M A 50	240.95
M A 200	227.31

FCF Yield	3.12%
Dividend Yield	1.40%
ROE	6.57%
Debt / Equity	25.41%
Net Debt / EBIDTA	121.15%
Price To Book	4.02
Price Earnings Ratio	60.02
Price To FCF	32.04
Price To sales	12.44
EV / EBITDA	28.47

2. Analog Devices Posts Strong Fiscal '25 Results with Revenue and EPS Growth

Analog Devices' fiscal '25 results reflect a robust business recovery, with revenue exceeding $11 billion, up 17% from fiscal '24, and earnings per share (EPS) of $7.79, a 22% increase versus fiscal 2024. In Q4, revenue was $3.08 billion, up 7% sequentially and 26% year-over-year, driven by double-digit growth across all end markets. Gross margin finished at 69.3%, up 140 basis points driven by higher utilizations. The actual EPS for Q4 came out at $2.26, beating estimates of $2.24.

Publication Date: Nov -26

                                    📋 Highlights
                                    Revenue & Earnings Growth:
                                                Fiscal '25 revenue hit $11B (+17% YoY), EPS rose to $7.79 (+22% YoY), with Q4 revenue at $3.08B (+26% YoY).
Industrial Dominance:
                                                Industrial revenue accounted for 46% of Q4 sales, surging 34% YoY and 12% sequentially.
Shareholder Returns:
                                                $4.1B returned via dividends/buybacks, with $4.3B in free cash flow (39% of revenue) in fiscal '25.
Gross Margin Expansion:
                                                Annual margin reached 69.3% (+140 bps), though Q4 dipped slightly from 70% due to lower industrial mix.

                                

Segment Performance

Industrial revenue was 46% of Q4 revenue, up 12% sequentially and 34% year-over-year. The company is seeing significant growth in the data center and ATE businesses, with data center growing 50% in '25 and ATE growing 40%. The company expects double-digit growth in both areas over the next few years. The aerospace and defense market is expected to more than double by the end of the decade, driven by increasing capital deployment to build defense systems globally.

Outlook and Guidance

For fiscal '26, revenue is expected to be $3.1 billion, plus or minus $100 million, with operating margin at the midpoint expected to be 43.5%, plus or minus 100 basis points. The company expects broad-based growth in '26, led by industrial and communications, with cyclical and idiosyncratic factors providing tailwinds. Analysts estimate next year's revenue growth at 13.2%, indicating a positive outlook for the company's future performance.

Valuation and Returns

With a P/E Ratio of 54.56 and an EV/EBITDA of 29.1, the company's valuation appears to be reflecting its strong growth prospects. The company returned $4.1 billion to shareholders through dividends and share repurchases and generated record free cash flow of $4.3 billion or 39% of revenue. The Dividend Yield is 1.54%, and the Free Cash Flow Yield is 3.42%, indicating a decent return for shareholders.

R&D Priorities and Lead Times

The company is prioritizing R&D spend in areas such as power management and doubling down on certain areas while possibly deemphasizing others. Lead times are mostly sub-13 weeks, which reduces visibility. The Q2 seasonal trend is up mid-single digits, and the company doesn't have a ton of visibility beyond the current quarter plus one.

3. NewsRoom

Analog Devices (ADI) is a Great Momentum Stock: Should You Buy?

Dec -04

Source: zacks.com

Beyond NVIDIA: 5 Semiconductor Stocks Set to Dominate 2026

Dec -03

Source: marketbeat.com

Are Computer and Technology Stocks Lagging Analog Devices (ADI) This Year?

Dec -03

Source: zacks.com

Analog Devices, Inc. (ADI) Presents at UBS Global Technology and AI Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

Analog Devices, Inc. $ADI Shares Sold by BLI Banque de Luxembourg Investments

Dec -01

Source: defenseworld.net

Berry Wealth Group LP Trims Stock Position in Analog Devices, Inc. $ADI

Nov -29

Source: defenseworld.net

AI Stocks You Should Buy to Boost and Reenergize Your Portfolio

Nov -28

Source: zacks.com

Analog Devices: An AI Infrastructure Enabler

Nov -27

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Designs, Develops, Manufactures and Markets a Broad Range of Integrated Circuits

Expected Growth: 10.0%

The company's growth is driven by increasing demand for analog and embedded processing products, expansion into new markets, and innovation in areas like automotive, industrial, and healthcare. Strong R&D investments and strategic acquisitions also contribute to growth, with a 10.0% increase likely fueled by these fundamental drivers.

7. Detailed Products

Analog-to-Digital Converters (ADCs)

High-performance ADCs for converting analog signals to digital data

Digital-to-Analog Converters (DACs)

High-precision DACs for converting digital data to analog signals

Operational Amplifiers (Op Amps)

High-performance Op Amps for amplifying and conditioning analog signals

Comparators

High-speed and low-power comparators for comparing analog signals

Switches and Multiplexers

High-performance switches and multiplexers for routing analog signals

Power Management ICs

High-performance power management ICs for managing power supply

MEMS Accelerometers and Gyroscopes

High-performance MEMS accelerometers and gyroscopes for measuring motion

Temperature Sensors

High-precision temperature sensors for measuring temperature

Interface and Isolated Products

High-performance interface and isolated products for communication and safety

8. Analog Devices, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Analog Devices, Inc. (ADI) is a leading provider of analog and digital signal processing solutions. The threat of substitutes is low due to the high switching costs and the specialized nature of ADI's products. Customers rely on ADI's high-performance and high-reliability products, making it difficult for substitutes to gain traction.

Bargaining Power Of Customers

ADI's customers are primarily large industrial, automotive, and consumer electronics companies. While these customers have some bargaining power due to their large order volumes, ADI's strong brand reputation, high-quality products, and innovative solutions limit their ability to negotiate significantly lower prices.

Bargaining Power Of Suppliers

ADI has a diversified supplier base and has established long-term relationships with its suppliers. The company also has a strong ability to negotiate prices and terms due to its large order volumes and strategic partnerships. This reduces the bargaining power of suppliers.

Threat Of New Entrants

The analog and digital signal processing industry requires significant investments in research and development, manufacturing capacity, and intellectual property. The high barriers to entry, combined with ADI's strong brand reputation and market position, make it difficult for new entrants to gain traction.

Intensity Of Rivalry

The analog and digital signal processing industry is highly competitive, with several established players competing for market share. ADI faces intense competition from companies such as Texas Instruments, STMicroelectronics, and Infineon Technologies. The high competition leads to pricing pressure, increased marketing and R&D expenses, and a focus on innovation and differentiation.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	17.86%
Debt Cost	4.58%
Equity Weight	82.14%
Equity Cost	9.13%
WACC	8.32%
Leverage	21.75%

11. Quality Control: Analog Devices, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

NVIDIA

A-Score: 5.3/10

Value: 0.0

Growth: 10.0

Quality: 9.2

Yield: 0.0

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

Analog Devices

A-Score: 4.8/10

Value: 1.1

Growth: 4.6

Quality: 7.3

Yield: 4.0

Momentum: 5.0

Volatility: 7.0

1-Year Total Return ->

GLOBALFOUNDRIES

A-Score: 3.7/10

Value: 5.4

Growth: 5.0

Quality: 4.2

Yield: 0.0

Momentum: 3.0

Volatility: 4.7

1-Year Total Return ->

AMD

A-Score: 3.6/10

Value: 0.2

Growth: 6.8

Quality: 6.6

Yield: 0.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

Intel

A-Score: 3.5/10

Value: 4.1

Growth: 1.2

Quality: 3.2

Yield: 1.0

Momentum: 9.0

Volatility: 2.7

1-Year Total Return ->

ON Semiconductor

A-Score: 3.3/10

Value: 2.8

Growth: 6.9

Quality: 5.7

Yield: 0.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

11.26%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.32%

Analog Devices, Inc. - US0326541051

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ADI

1.c. Company Highlights

Lower Growth

Less Volatile

Higher Yield

Earnings Beats

Revenues Beats

Expensive

Average Growth

Average Quality

Better Quality

2. Analog Devices Posts Strong Fiscal '25 Results with Revenue and EPS Growth

Segment Performance

Outlook and Guidance

Valuation and Returns

R&D Priorities and Lead Times

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.00%)

6. Segments

Designs, Develops, Manufactures and Markets a Broad Range of Integrated Circuits

Expected Growth: 10.0%

7. Detailed Products

Analog-to-Digital Converters (ADCs)

Digital-to-Analog Converters (DACs)

Operational Amplifiers (Op Amps)

Comparators

Switches and Multiplexers

Power Management ICs

MEMS Accelerometers and Gyroscopes

Temperature Sensors

Interface and Isolated Products

8. Analog Devices, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Analog Devices, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

277.26$

Current Price

277.26$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA