What to look for when Analog Devices (ADI) reports Q4 earnings

Analog Devices (NASDAQ: ADI) is slated to report its fourth-quarter 2019 earnings results on Tuesday, November 26, before the market opens. The results will be hurt by declines in industrial, automotive, consumer, and communications markets due to the ongoing broad-based weakness in the market.

The restructuring of certain manufacturing facilities and discontinue of product shipments are likely to impact the company for the fourth quarter. This could enable its customers to delay their existing and future orders.

Read: Qualcomm Q4 earnings review

However, the results will be benefited from the development of 5G technology and electric vehicles. The company will also stand beneficial from the continued strength in aerospace, defense, healthcare, and electronic test and measurement businesses.

During uncertain times, the company is expected to manage its expenses while also investing strategically in areas that continue to position itself to deliver profitable growth over the long-term. Also, the company has been struggling to tackle the debt due to market weakness.

As of August 3, 2019, the company’s long-term debt stood at $5.28 billion and the current debt is $411.43 million while cash and cash equivalents remained at $612.16 million and the cash flow from operations stood at $552.55 million. This represents the company would take ten years to repay the debt as it would be able to repay 9.7% each year.

Analysts expect the company’s earnings to drop by 21.30% to $1.22 per share and revenue will decrease by 9% to $1.45 billion for the fourth quarter. The company has surprised investors by beating analysts’ expectations in all of the past four quarters. The majority of the analysts recommended a “strong-buy” or “buy” rating with an average price target of $118.83.

Read: Intel Q3 earnings review

For the third quarter, Analog Devices posted an 11% decline in earnings due to lower revenue. The ongoing broad-based weakness was balanced by growth in new areas such as 5G and electric vehicles. The declines in Industrial, Automotive, and Consumer impacted the top-line results.

Looking ahead into the fourth quarter, the company expects revenue in the range of $1.40 billion to $1.50 billion and earnings in the range of $0.79 to $0.93 per share. Adjusted earnings are anticipated to be in the range of $1.15 to $1.29 per share for the fourth quarter.

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