Analog Devices Inc (ADI) stock analysis

P/E below its 5-year median

Analog Devices's P/E of 48.5 is below its own 5-year median of 49.4.

P/E above the industry

Analog Devices's P/E of 48.5 is above the Electronic Components and Accessories median of 34.8.

EV/EBITDA below its 5-year median

Analog Devices's EV/EBITDA of 41.5 is below its 5-year median of 45.4.

P/B above the industry

Analog Devices's price-to-book of 5.91 is above the Electronic Components and Accessories median of 3.49.

Trading above fair value

The share price of $409.08 is above our fair value estimate of $313.15.

Margin of safety under 20%

The price is 30.6% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew -2.8% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -4.6% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 111% over the last twelve months, against a 5-year average of 13.2% a year.

Growing faster than the industry

Revenue grew 33.6% over the last twelve months; the Electronic Components and Accessories median is 17.3%.

Guidance issued

The latest outlook (fourth quarter of fiscal 2026 revenue, Aug 19, 2026) was issued for the first time, so it neither adds nor takes away points.

Gross margin improving

Gross margin was 65.8% over the last twelve months, against 60.2% a year earlier.

Return on equity under 15%

Return on equity was 12.2% over the last twelve months and averaged 6.7% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 10.9%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

Analog Devices's return on equity of 12.2% is above the Electronic Components and Accessories median of 4.8%.

Earnings grew over 5 years

Net income grew 13.2% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 29.8% over the last twelve months, against a 5-year average of 21.3%.

Net margin above the industry

Analog Devices's net margin of 29.8% is above the Electronic Components and Accessories median of 2.9%.

Low debt

Debt is 27.2% of shareholders' equity, under the 40% we consider low.

Debt rising against equity

Debt to equity rose from 0.0% five years ago to 27.2%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 60.8% of total debt.

Interest well covered

Operating income covers interest expense 14.1 times.

Short-term assets cover short-term debts

Current assets are 1.25 times current liabilities.

Low bankruptcy risk

The Altman Z-score is 9.01; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Analog Devices paid dividends worth 1.0% of the share price over the last twelve months.

Yield below Treasuries

The 1.0% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Analog Devices yields 1.0%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 49.4% of net income.

Covered by free cash flow

Dividends take 41.4% of free cash flow.