What’s Behind Analog Devices Stock’s 2x Jump Since 2018?

ADI: Analog Devices  logo
ADI
Analog Devices

Analog Devices Inc. (NASDAQ: ADI) stock price jumped almost 1.9x from $85 in 2018 end, to over $160 currently, primarily due to favorable changes in its P/S multiple. Additionally, the company witnessed a rise in revenue over this period, and revenue per share has increased, despite a jump in the outstanding share count.

In our interactive dashboard, Why Analog Devices Stock Moved: ADI Stock Has Gained 87% Since 2018, we break down the factors behind this move.

(A) ADI’s Total Revenue has grown 18% from $6.2 billion in 2018 to $7.3 billion on an LTM basis

  • Analog Devices’ total revenue initially dropped from $6.2 billion in FY ’18 to $5.6 billion in FY ’20, before jumping strongly to $7.3 billion in FY ’21, and currently stands at around the same level (ADI’s fiscal year ends in October).
  • The company designs, develops and manufactures a broad range of integrated circuits and tracks its results across just one reportable segment.
  • Despite weak numbers in FY ’19 and FY ’20, the company’s recent jump in sales means that revenue numbers now stand 20% higher than its FY ’18 levels.
  • For details about ADI revenues and comparison to peers, see Analog Devices (ADI) Revenue Comparison
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(B) Revenue per share (RPS) increased 11% from $16.66 in 2018 to $18.42 currently

  • ADI revenue rose from $6.2 billion in 2018 to $7.3 billion currently, while the outstanding share count increased from 372 million in 2018 to 397 million currently.
  • Due to this, RPS has risen from $16.66 in FY ’18 to $18.42 currently.

(C) Price-To-Sales (P/S) multiple for ADI rose strongly from 7.2x in 2018 to 12.6x by 2021 end, but has pulled back to 11.6x currently, still more than 1.5x higher than its 2018 level

  • Despite ADI’s weak performance between 2018-end to 2020, its P/S multiple rose strongly from 7.2x in 2018 to as high as 13.8x in 2020, on the back of rising investor expectations surrounding a revival in demand for the company’s products.
  • With the jump in sales in FY ’21, the P/S multiple still came in at 12.6x in late 2021.
  • However, amidst current geopolitical tensions, which have led to increased uncertainty in the broader markets, the P/S multiple has pulled back, currently standing at around 11.6x.
  • For additional details about the company stock returns and comparison to peers, see Analog Devices (ADI) Stock Return Comparison.

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Returns Apr 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ADI Return -3% -9% 121%
 S&P 500 Return 0% -5% 102%
 Trefis Multi-Strategy Portfolio 0% -8% 262%

[1] Month-to-date and year-to-date as of 4/8/2022
[2] Cumulative total returns since the end of 2016

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