Stock Story -
What Happened: Shares of manufacturer of analog chips, Analog Devices (NASDAQ:ADI) jumped 9.1% in the afternoon session after the company reported first-quarter results, which blew past analysts' EPS expectations. Revenue also came in ahead of expectations despite the company calling out "continued macro and inventory headwinds." Next quarter's revenue guidance came in higher than Wall Street's estimates. Notably, the company expects to return to sequential quarterly revenue growth amid a more stable customer base following recent inventory normalization and improvements in new orders, suggesting it is exiting the trough of the cyclical downturn in the semiconductor industry.
Separately, the Board of Directors declared a quarterly cash dividend of $0.92 per outstanding share of common stock. Zooming out, we think this was a very solid quarter, showing that the company is staying on track.
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What is the market telling us: Analog Devices's shares are not very volatile than the market average and over the last year have had only a move greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago, when the stock dropped 6.2% on the news that the company reported second quarter results that narrowly beat analysts' estimates for revenue and earnings per share (EPS). However, free cash flow missed, and inventory levels increased. Revenue guidance for the next quarter came in below Consensus, with management calling for topline growth to moderate due to the "continued economic uncertainty and normalizing supply chains." The overall results were weak and highlighted the company's exposure to growing macro headwinds.
Analog Devices is up 22.7% since the beginning of the year. Investors who bought $1,000 worth of Analog Devices's shares 5 years ago would now be looking at an investment worth $2,342.
