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 $194.83, Analog Devices Inc has witnessed a daily gain of 6.4%, marked against a three-month change of -9.98%. 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: 8/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 8/10
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 a high GF Score of 92 out of 100, Analog Devices Inc signals the highest outperformance potential.
Understanding Analog Devices Inc Business
Analog Devices Inc is a leading analog, mixed-signal, and digital-signal processing chipmaker. The firm has a significant market share lead in converter chips, which are used to translate analog signals to digital and vice versa. The company serves tens of thousands of customers; more than half of its chip sales are to industrial and automotive end markets. ADI's chips are also incorporated into wireless infrastructure equipment. With a market cap of $96.63 billion and sales amounting to $9.34 billion, Analog Devices Inc boasts an operating margin of 21.67%, reflecting its efficiency in managing operations.
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 6.32, 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 a favorable Debt-to-Revenue ratio of 0.81, 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. Analog Devices Inc's strong Predictability Rank of 3.5 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 1.2%, which outperforms worse than 51.06% of 946 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 9.3, and the rate over the past five years is 10.9. This trend accentuates the company's continued capability to drive growth.
Conclusion
Analog Devices Inc's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. With a strong balance sheet, impressive profitability, and a commitment to growth, Analog Devices Inc is well-positioned to continue its trajectory of success. For investors seeking companies with strong GF Scores, GuruFocus Premium members can explore more opportunities 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.
