ADI Stock: Is Analog Devices stock a good buy after Q1 earnings?

The fast-paced digitalization continues to drive up the demand for microprocessors and other semiconductor products, and manufacturers are finding it difficult to deliver products in time. Analog Devices, Inc. (NASDAQ: ADI) is well-positioned to take advantage of the trend, thanks to its diversified product line-up.

The Silicon Valley-based semiconductor company achieved impressive revenue and profit growth in recent quarters, with earnings hitting an all-time high in the early months of the new fiscal year. The stock made strong gains on Wednesday — recovering from the recent slowdown — after the company reported better-than-expected earnings and revenues.

The Stock

ADI looks poised to maintain the uptrend throughout the year and breach the $200-mark. This is the right time to buy the stock, considering the favorable valuation and encouraging demand conditions. Moreover, the management is setting aside a significant portion of cash for returning capital to shareholders, after raising the dividend consistently over the years.

For the first quarter of 2022, Analog Devices reported adjusted earnings of $1.94 per share, which is up 35% from the year-ago period. The bottom line also exceeded the consensus estimates. Net revenues increased 12% year-over-year to $2.68 billion and came in above the consensus estimates amid strong growth across the key operating divisions and geographical segments.

Record Revenues

Revenues hit record highs in each of the trailing three quarters. Unadjusted net income was $280 million or $0.53 per share, compared to $388.5 million or $1.04 per share last year. Going forward, the company is expected to continue benefiting from its diversified product portfolio and strong demand for semiconductor products.

“ADI is the leader in innovating at the edge. We have an industry-leading high-performance portfolio that continues to benefit from the acceleration of mass digitalization across industries. And with Maxim, our portfolio has increased in breadth and depth and we see even more opportunity than ever to capture additional market share. And I’m very optimistic about what our future holds,” said chief executive officer Vincent Roche during his interaction with analysts.

Read management/analysts’ comments on Analog Devices Q1 earnings

Analog Devices’ stock traded higher throughout Wednesday, extending the post-earnings momentum. The stock has lost about 8% so far this year.