Why Is Analog Devices (ADI) Down 10.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Analog Devices (ADI). Shares have lost about 10.1% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Analog Devices due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Analog Devices Q1 Earnings Beat Estimates, Revenues Rise Y/Y

Analog Devices reported first-quarter fiscal 2026 non-GAAP earnings of $2.46 per share, which beat the Zacks Consensus Estimate by 6.5%. This company reported earnings of $1.63 per share in the year-ago period.

Analog Devices’ first-quarter fiscal 2026 revenues of $3.16 billion surpassed the Zacks Consensus Estimate by 1.3%. The top line increased 30% from the year-ago quarter’s revenues of $2.42 billion.

Analog Devices’ Q1 Details

Industrial: Revenues from this segment were $1.49 billion, representing 47% of total revenues and reflecting 38% year-over-year growth.

Automotive: Revenues reached $794.4 million (or 25% of total revenue), up 8% year over year.

Communications: Revenues came in at $476.8 million, accounting for 15% of total revenues and rising 63% year over year.

Consumer: The segment generated $399.8 million (or 13% of revenues), marking a 27% increase compared with the same quarter last year.

The adjusted gross margin expanded 240 basis points to 71.2%, while the adjusted operating margin was 45.5%, up 500 basis points year over year.

ADI’s Balance Sheet and Cash Flows

As of Jan. 31, 2026, cash and cash equivalents were approximately $2.91 billion, up from $2.5 billion as of Nov. 1, 2025. The company also held $1.14 billion in short-term investments during the first quarter.

Long-term debt was $7.24 billion compared with $8.15 billion at the end of the previous quarter.

Analog Devices generated $1.37 billion in operating cash flow and $1.26 billion in free cash flow during the first quarter of fiscal 2026.

In the fiscal first quarter, the company returned $1 billion to shareholders, comprising $484 million in dividends and $516 million in share repurchases.

ADI Initiates Q2 FY26 Guidance

For the second quarter of fiscal 2026, management expects revenues of $3.5 billion (+/- $100 million). The company projects a reported operating margin of approximately 36.4% (+/-150 bps) and an adjusted operating margin of about 47.5% (+/-100 bps). Reported earnings are anticipated to be $2.19 (+/-$0.15) per share, while adjusted earnings are expected to be $2.88 (+/-$0.15) per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates review.

The consensus estimate has shifted 18.34% due to these changes.

VGM Scores

At this time, Analog Devices has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Analog Devices has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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