Analog Devices Inc (ADI, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $201.37, Analog Devices Inc has witnessed a daily gain of 2.06%, marked against a three-month change of 23.46%. A thorough analysis, underlined by the GF Score, suggests that Analog Devices Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 7/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and a moderate GF Value rank, GuruFocus assigned Analog Devices Inc the GF Score of 94 out of 100, which signals the highest outperformance potential.
Understanding Analog Devices Inc Business
Analog Devices Inc, with a market cap of $99.85 billion and sales of $12.31 billion, is a leading analog, mixed signal, and digital signal processing chipmaker. The company boasts a significant market share lead in converter chips, which are used to translate analog signals to digital and vice versa. Serving tens of thousands of customers, over half of Analog Devices Inc's chip sales are made to industrial and automotive end markets. The company's chips are also incorporated into wireless infrastructure equipment, showcasing its broad market reach and technological prowess.
Financial Strength Breakdown
According to the Financial Strength rating, Analog Devices Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Analog Devices Inc stands impressively at 15.05, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 5.28, Analog Devices Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.57, Analog Devices Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Analog Devices Inc's impressive standing among its peers in generating profit. The company's Operating Margin has increased over the past five years, with the latest figure at 32.37%. The Piotroski F-Score confirms Analog Devices Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding and operating efficiency. Analog Devices Inc's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Analog Devices Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 17.3%, which outperforms better than 62.24% of 874 companies in the Semiconductors industry. Moreover, Analog Devices Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 25.1, and the rate over the past five years is 12.2. This trend accentuates the company's continued capability to drive growth.
Next Steps
Considering Analog Devices Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. With a GF Score of 94, the company stands out as a compelling investment opportunity for those seeking growth and stability in the dynamic semiconductor industry. As the company continues to innovate and expand its market reach, investors may find Analog Devices Inc an attractive addition to their portfolios.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
