Analog Devices Stock Has Outperformed The S&P Since 2018- Here’s Why

ADI: Analog Devices  logo
ADI
Analog Devices

Analog Devices Inc. (NASDAQ: ADI) stock price has jumped 1.9x from around $85 in 2018 end to $165 currently, primarily due to favorable changes in its P/S multiple. During this period, the company also witnessed an 18% rise in revenues, but a 40% jump in the outstanding share count negatively impacted the company’s revenue per share. Despite this, the company’s stock price has risen strongly, and has managed to outperform the S&P 500, which returned around 60% over the same period.

In our interactive dashboard, Why Analog Devices Stock Moved: ADI Stock Has Gained 92% Since 2018, we break down the factors behind this move.

(A) ADI’s Total Revenue has risen 18% from $6.2 billion in FY 2018 to $7.3 billion currently

  • 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 additional details about ADI’s revenues and comparison to peers, see Analog Devices (ADI) Revenue Comparison
Relevant Articles
  1. Starbucks Stock Down 35% in 2022, Is There An Upside?
  2. Where Is Charles Schwab Stock Headed?
  3. What’s Driving Textron Stock?
  4. With Copper Prices Falling, What’s Next For Freeport Stock?
  5. Forecast Of The Day: Volkswagen’s Average Revenue Per Audi Vehicle
  6. What’s New With T-Mobile Stock?

(B) Revenue per share (RPS) increased 11% from $16.66 in FY 2018 to $18.42 currently

  • ADI’s revenue rose from $6.2 billion in FY 2018 to $7.3 billion currently, but the outstanding share count rose from 372.1 million in FY 2018 to around 522.2 million currently.
  • Due to this, RPS has risen 11% 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 13.7x by 2020 end but has pulled back to 11.8x currently, still 1.6x higher than its 2018 level

  • ADI’s P/S multiple rose strongly to around 13.7x by late 2020, on the back of rising investor expectations surrounding increased demand for its products, leading to a rise in the company’s sales.
  • However, due to the increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 11.8x.
  • For additional details about the company stock returns and comparison to peers, see Analog Devices (ADI) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jun 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ADI Return 0% -4% 132%
 S&P 500 Return 1% -13% 86%
 Trefis Multi-Strategy Portfolio 3% -16% 230%

[1] Month-to-date and year-to-date as of 6/2/2022
[2] Cumulative total returns since the end of 2016

 

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates