ANALOG DEVICES INC ADI: Stock price, financial analysis and comparison with its peers
Stock - ADI
ANALOG DEVICES INC
Prices and values in USD currency
Price - $202.78
Price is the close price as of yesterday market close (i.e. 2025-05-08). Prices are not updated in real time.
Sector
Technology
Industry
Semiconductors
Employees
15900.0
ISIN
US0326541051
Business summary
Analog Devices Inc is engaged in the semiconductor industry. Its business involves designing, manufacturing and marketing of high-performance analog, mixed-signal and digital signal processing integrated circuits used in all types of electronic equip... See more...
| ADI | LRCX | NVDA | MSFT | |
|---|---|---|---|---|
| Company Name | ANALOG DEVICES INC | LAM RESEARCH CORP | NVIDIA CORP | MICROSOFT CORP |
| Reason for selection | Selected stock | Stock with min Market Cap difference in Industry | Highest market cap. in industry | Highest market cap. in sector |
| Market Cap | $100,574 M | $95,806 M | $2,863,828 M | $3,256,718 M |
| Industry | Semiconductors | Semiconductors | Semiconductors | Application Software |
| Sector | Technology | Technology | Technology | Technology |
| Total Equity | $35,071 M | ************************* | ************************* | ************************* |
| Shares Outstanding | 496 M | ************************* | ************************* | ************************* |
| Close | $202.78 | ************************* | ************************* | ************************* |
| Earning Yield | 0.02% | ************************* | ************************* | ************************* |
| ROIC | 0.29% | ************************* | ************************* | ************************* |
| Current Ratio | 1.9 | ************************* | ************************* | ************************* |
| TBI Financial Score | 92 | ************************* | ************************* | ************************* |
| Preferred Stocks | $517 M | ************************* | ************************* | ************************* |
| Total Capitalization | $101,092 M | ************************* | ************************* | ************************* |
| Book Value per Share | 71 | ************************* | ************************* | ************************* |
| Earning Yield EBITavg3 | 0.03% | ************************* | ************************* | ************************* |
| P E (3 years avg) | 39 | ************************* | ************************* | ************************* |
| Net Profit Margin | 0.17% | ************************* | ************************* | ************************* |
| Dividends Yield | 1.82% | ************************* | ************************* | ************************* |
| Working Capital/Debt | 0.70% | ************************* | ************************* | ************************* |
| Net Income | $1,564 M | ************************* | ************************* | ************************* |
| Net Income 5yGrowth | 0.85% | ************************* | ************************* | ************************* |
| Num of Years w Dividends 10y | 10 | ************************* | ************************* | ************************* |
Investment Analysis Report: ADI and his peers
Overview:
Below you'll find an AI powered output based on the selected companies for comparison. If you change the companies, the output will be re-calculated.
For the analysis we decided to use Graham (father of value investing) as inspiration, the comparison is structured and oriented as the writer did to compare companies back in his times in the chapter 13 of the famous book The Intelligent Investor.
1. Profitability
(a) All 3 companies show satisfactory earnings on their invested capital.
A high rate of return on tangible book value often goes along with a high annual growth rate in earnings per share. Mainly due to the fact that the management seems to be qualified to assign invested capital to profitable businesses and make earnings grow over time.
(b) Profit margins are usually an indication of comparative strength or weakness. But it tends to fluctuate based on several factors which can lead to two types of higher-than-average margins: temporary margins caused by external factors (like rises in commodity prices that the company produce due to temporary high demand or temporary low offer), and competitive advantages which stem from the intrinsic company and firm-specific factors.
We define companies with net profit margins of over 20% as having very high margin.
All 3 companies show very high margins.
2. Stability
All 3 companies have reported positive net income in all of the last 10 years with available statements.
These are the companies from the table above that have always reported positive Net Income: LRCX, NVDA, MSFT.
Stability is not only about positive or negative profits, it's also about volatility of earnings and number of years of observations (number of available annualized income statements). The table below summarize the stability of the earnings showing 3 key metrics: Maximum drop in net profits, number of years out of number of years with available financials with negative trend (% change is negative) and average net profit change.
| Ticker | Stability Max Drop | # Years Statements | # Years Neg Change | Stability Mean Change |
|---|---|---|---|---|
| LRCX | -0.26585596893272123 | 10 | 1 | 0.26762429943672134 |
| NVDA | -0.5521378037526915 | 10 | 0 | 1.2318406312770909 |
| MSFT | -0.35069801919038013 | 10 | 0 | 0.37030293364199146 |
To simplify assessment, we built a unique metric of stability that weights equally (50%) the rank of maximum drop and % number to years with negative change. But we restrict this rank to companies that have at least 5 years of available financials, otherwise any analysis of stability would be limited.
| Ticker | Rank Stability |
|---|---|
| MSFT | 1.0 |
| LRCX | 2.0 |
| NVDA | 3.0 |
3. Growth
Net profit has increased more than a third (33%) in the last 10 years for the following companies: LRCX, NVDA, MSFT.
Note that if there are companies with high growth in Net Income this could also be thanks to merger or/and acquisitions financed with either debt and/ or issuing of shares, this distorts the analysis as it's not a reflection of the capacity of the company to create real growth.
Once again, the reduce of net income can be a result of a company selling part of their businesses, decision that can be very convenient when selling business where the company doesn't have a competitive advantage. And decided to focus in those business lines they are good at.
| Ticker | Net Income 10y Growth |
|---|---|
| NVDA | 62.46797153024911 |
| LRCX | 5.499668011217129 |
| MSFT | 3.759885083541241 |
4. Financial Position
All 3 companies have very strong financial positions (higher than 90) according to our TBI financial health score.
has/ve a weak financial position according to our score.
Regarding liquidity, 2 (LRCX, NVDA) companies out of 3 have better than standard ratio of $2 current assets for $1 of current liabilities.
MSFT do/es not have such an strong liquidity position.
Note that MSFT might have difficulties accessing external cash, given it's bad liquidity and overall financial position (measured using TBI score).
5. Dividends
As explained by Graham in his book The Intelligent Investor, what really counts is the history of continuance without interruption. We agree with that, however it's normal to see companies of the new world in the Tech industry not paying dividends at all in order to maximize the availability of cash to increase the business, which is not necessarily bad, but probably not the best to the investor at some point. Therefore, Tech companies not paying dividends is not necessarily a bad thing if all the rest of the metrics are good. For the companies in this comparison, below we can see the number of years with dividends in the last 10 years of data:
| Ticker | # years with dividends 10y |
|---|---|
| LRCX | 10 |
| NVDA | 10 |
| MSFT | 10 |
'Regarding dividend yields, the top two companies with the highest yield in the table are:
| Ticker | Dividends yield |
|---|---|
| LRCX | 1.16 |
| MSFT | 0.72 |
6. Earning Yield and Stock Price History
The earning yield could help us to identify bargain stocks, in particular if companies with high earning yields are able to maintain those levels of earnings over time (thanks to competitive advantages and a strong financial position).
Companies with yields below 5%, this is more than 20 years of earning to repay its value, are not that interesting at first sight. Unless they are growing fast and you have enough information to assume that they will be able to maintain these growing rates for a significant number of years (big assumptions and predictions over a long period of time are risky though, many scenarios can happen in between, e.g. new competitors, financial distress due to changes in macroeconomic trends, bad management, etc.)
These are the companies with low earnings in the last 12 months compared to their price: NVDA, MSFT.
On the other hand, there is only one company from the list with good earnings in the last 12 months compared to it's price: LRCX.
Conclusion
Let's first analyze the company that you selected.
In general, when we invest we are looking to pay less than it worth, thus we need to define how to identify this situation. Ideally, we should buy either bargain stocks or stocks that are not too expensive and its growth, if maintained for a significant period of time, can lead to extraordinary returns.
The selected company has an Earning Yield of 5%.
The company has a good EY, which makes it worth analyzing for potential investing. If accompanied by acceptable growth (business is not shrinking), good management quality and solid financials it can definitely be a good investment opportunity to have it your portfolio.
Now, whenever you evaluate an investment opportunity its a good practice to compare it with other alternatives. Here we compared it with their peers or selected companies for analysis.
From all the information and conclusions made above we find that NVDA is the company that shows best outcome overall.
In order to derive this conclusion we created a ranking method from the 6 angles described above to conclude which one seems to be the best investment opportunity. We weighted equally all the 6 areas (i.e. Profitability, Stability, Growth, Financial Position, Dividends and Earnings Yield) for each of the 3 companies compared in this analysis.
In his book, The Intelligent Investor, Graham suggested 10 points that a stock must fulfill in order to be suitable for what he calls a Defensive investor.
However, none of the companies fulfill all 10 conditions stated by Graham, however matching all those conditions is not easy and it doesn't mean that those companies are not good investment opportunities. Specially nowadays where the market is very different compared to the moment he wrote the book.