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Upside can persist if higher FY2027 revenue and adjusted-EPS expectations are delivered and positive industrial growth improves cost absorption while free cash flow remains positive.
The FY2027 analyst-consensus annual revenue estimate falls below $17.00 billion in two consecutive post-event updates.
Sell. The report-date price exceeds Fair value, so the expected recovery does not offset valuation risk.3
The report was prepared at $362.25 on 2026-09-04. Fair value is $196.19, while the secondary Potential value is $382.12 as of 2026-09-08.3
The main risk is the FY2027 revenue estimate falling below $17.00 billion for two consecutive post-event snapshots. Two such readings would signal weaker expected demand. If realized sales then fall, fixed-cost absorption and free cash flow would weaken.
Higher FY2027 revenue and adjusted-EPS expectations can support upside if positive industrial growth improves cost absorption and free cash flow stays positive. Upside may fade if the revenue estimate breaks its low endpoint across consecutive snapshots or industrial revenue contracts.146
The favorable cycle requires continued industrial growth and delivery of the higher FY2026 and FY2027 revenue expectations. That would improve cost absorption and cash generation.1
Sell because the report-date price stands materially above Fair value.3
The favorable cycle requires continued industrial growth and delivery of the higher FY2026 and FY2027 revenue expectations. That would improve cost absorption and cash generation.1
Sell because the report-date price stands materially above Fair value.3
The following table summarizes revenue by sales channel. Analog Devices, Inc. sells its products globally through a direct sales force, third-party distributors, independent sales representatives and via its website.
Distributors are customers that buy products with the intention of reselling them. The Company sells its products globally through a direct sales force, third-party distributors, independent sales representatives and via its website.
The key stress is a recovery failure combined with weaker cash generation. These scenarios are standalone tests, not additive losses.
This path applies if recovery or cash-generation checkpoints fail. Its operating triggers and consequences are set out in the dedicated bear-case section.
Annual free cash flow below zero while debt remains above cash would weaken dividends, repurchases, and debt service.3
A rise exceeding two percentage points from the 2026-09-08 moderate cost of equity would reduce the present value of unchanged cash forecasts.
The five developments that would weaken our investment case.
If this hypothetical stress occurred, cash available for dividends, repurchases, and debt service would shrink. Because FY2025 debt exceeded cash, financing pressure could rise.
Current:$4.28 billion in FY2025
Alert ifBelow $0 during a fiscal year
The cited facts establish a large industrial revenue base and concentrated distributor channels, but not a cost advantage or distribution control. No cited mechanism establishes switching costs, software integration, pricing power, or customer retention. FY2025 cash generation shows resilience, not the source of a moat.
QCOM, TXN, MCHP, and MRVL belong as semiconductor operating comparisons, but each differs in growth, margins, scale, or valuation. They are cross-checks rather than interchangeable businesses.
FY2025 free cash flow of $4.28 billion shows that ADI generated substantial cash in that period. It does not show that customers face switching costs or that ADI controls pricing.4
Each lens answers a different valuation question. Only included lenses set Fair value; floors and diagnostics provide context.
Apply a terminal P/E to the dated forward path, then discount that future share value back to the analysis date.
None of the valuation methods used to calculate Fair value relies on a separate assumption about how long the competitive advantage lasts.
The highlighted cell is Fair value when every assumption sits at its base level ($196.19). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $4.1B after modeled capex of $533.6M, with terminal value at 61.8% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
The base path is confirmed by sustained estimate delivery and positive industrial growth. Consecutive FY2027 estimate breaks would disconfirm it.
A beat can extend upside if industrial growth stays positive, because the largest operating market would support sales and cost absorption. The signal fades if FY2027 estimates weaken across updates or industrial revenue contracts.
Delivery near expectations supports recovery but does not close the valuation gap.
A sustained estimate break would weaken sales, profit, and cash expectations.
FY2025 operating cash exceeded reported profit, and free cash flow remained positive.5
FY2025 operating cash of $4.81 billion funded $533.55 million of capital spending and left $4.28 billion of free cash flow.45
FY2025 debt of $8.67 billion exceeded cash of $2.50 billion. If free cash flow weakens, that gap could reduce capital-allocation flexibility; the cited figures alone do not establish a financing shortfall.
A single dated return observation does not establish a trajectory, so no improving or declining trend is asserted.
The enterprise discount rate was 9.6644% on 2026-09-08; no period-matched return spread is presented.
Operating cash was $4.81 billion, free cash flow was $4.28 billion, and reported profit was $2.27 billion.
Reported earnings converted into cash available for capital spending, distributions, and debt service.
Diluted average shares were 505.959 million in FY2023, while shares outstanding were 484.565 million on 2026-09-08.
Continued per-share support depends on cash generation and future capital-allocation choices.
| Revenue | $11,019,707,000 |
|---|---|
| Cost of revenue | $4,246,229,000 |
| Gross profit | $6,773,478,000 |
| Operating expenses | $3,840,982,000 |
| Operating income | $2,932,496,000 |
| Non-operating items and tax | -$665,154,000 |
| Net income | $2,267,342,000 |
| Total assets | $47,992,712,000 |
|---|---|
| Cash | $2,499,406,000 |
| Current assets | $7,108,061,000 |
| Total liabilities | $14,176,957,000 |
| Current liabilities | $3,245,801,000 |
| Shareholders’ equity | $33,815,755,000 |
| Net income | $2,267,342,000 |
|---|---|
| Operating inflow | $4,812,202,000 |
| Depreciation and amortization | $1,998,845,000 |
| Stock-based compensation | $321,560,000 |
| Other operating adjustments | $224,455,000 |
| Operating cash flow | $4,812,202,000 |
| Cash available | $6,803,544,000 |
| Beginning cash | $1,991,342,000 |
| Investing outflow | $1,321,521,000 |
| Capex | $533,552,000 |
| Other investing activities | $787,969,000 |
| Financing outflow | $2,982,617,000 |
| Ending cash | $2,499,406,000 |
| Investing cash flow | -$1,321,521,000 |
| Financing cash flow | -$2,982,617,000 |
Source: SEC EDGAR · Filed 2025-11-25 · SEC EDGAR
| Revenue by operating segment | Revenue | Share | YoY |
|---|---|---|---|
| Industrial | $4.9B | 44.7% | 14.9% |
| Automotive | $3.3B | 29.7% | 15.5% |
| Consumer | $1.4B | 13% | 18.8% |
| Communications | $1.4B | 12.5% | 26.2% |
Source: SEC EDGAR · Filed 2025-11-25 · SEC EDGAR
| Revenue by geography | Revenue | Share | YoY |
|---|---|---|---|
| United States | $3.2B | 29.4% | 14% |
| China | $2.9B | 25.9% | 34.3% |
| Europe | $2.3B | 20.7% | 8.3% |
| Rest Of Asia | $1.5B | 13.5% | 23.7% |
| Japan | $989.9M | 9% | -8.8% |
| Rest Of North And South America | $162.5M | 1.5% | 160.7% |
Point-in-time financial data used in the 2026-09-08 analysis.
| Period | Revenue | EBITDA | Net income | Operating cash flow | Free cash flow | Capex | Depreciation and amortization | Stock-based compensation | Share repurchases | Dividends paid | Net debt issuance | Investing cash flow | Financing cash flow | Beginning cash | Ending cash | Cash and investments | Total debt | Operating margin | ROIC | WACC | ROIC − WACC spread |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016-10-29 | $3.4B | $1.3B | $861.7M | $1.3B | $1.2B | $127.4M | $209.8M | $63.4M | $370.1M | $513.2M | — | -$1.2B | -$33.4M | — | $921.1M | $4.1B | $1.7B | 30.0% | — | 7.1% | — |
| 2017-10-28 | $5.2B | $1.8B | $805.4M | $1.2B | $950.3M | $204.1M | $584.1M | $104.2M | $46.5M | $602.1M | — | -$6.6B | $5.6B | $921.1M | $1B | $1B | $7.9B | 22.2% | — | 6.8% | — |
| 2018-11-03 | $6.2B | $2.7B | $1.5B | $2.4B | $2.2B | $254.9M | $799.1M | $151.2M | $226M | $703.3M | — | -$314M | -$2.4B | $1B | $816.6M | $816.6M | $6.3B | 30.5% | — | 7.5% | — |
| 2019-11-02 | $6B | $2.5B | $1.4B | $2.3B | $2B | $275.4M | $811.3M | $150.3M | $613M | $777.5M | — | -$293.2M | -$2.1B | $816.6M | $648.3M | $648.3M | $5.5B | 28.6% | — | 6.9% | — |
| 2020-10-31 | $5.6B | $2.3B | $1.2B | $2B | $1.8B | $165.7M | $810.9M | $149.5M | $244.5M | $886.2M | — | -$180.5M | -$1.4B | $648.3M | $1.1B | $1.1B | $5.2B | 26.7% | — | 5.6% | — |
| 2021-10-30 | $7.3B | $2.6B | $1.4B | $2.7B | $2.4B | $343.7M | $1.1B | $243.6M | $2.6B | $1.1B | — | $2.1B | -$4B | $1.1B | $2B | $2B | $6.8B | 23.1% | — | 6.3% | — |
| 2022-10-29 | $12B | $5.6B | $2.7B | $4.5B | $3.8B | $699.3M | $2.3B | $323.5M | $2.6B | $1.5B | -$223M | -$657.4M | -$4.3B | $2B | $1.5B | $1.9B | $6.6B | 27.3% | — | 8.9% | — |
| 2023-10-28 | $12.3B | $6.2B | $3.3B | $4.8B | $3.6B | $1.3B | $2.3B | $299.8M | $3B | $1.7B | $481.5M | -$1.3B | -$4.1B | $1.5B | $958.1M | $958.1M | $7B | 31.1% | — | 9.8% | — |
| 2024-11-02 | $9.4B | $4.2B | $1.6B | $3.9B | $3.1B | $730.5M | $2.1B | $262.7M | $615.6M | $1.8B | $588.4M | -$1.1B | -$1.7B | $958.1M | $2B | $2.4B | $7.6B | 21.6% | — | 9.2% | — |
| 2025-11-01 | $11B | $5B | $2.3B | $4.8B | $4.3B | $533.6M | $2B | $321.6M | $2.2B | $1.9B | $989.7M | -$1.3B | -$3B | $2B | $2.5B | $3.7B | $8.7B | 26.6% | — | 9.7% | — |
Analog Devices Inc. (ADI) trades at 21.5x forward earnings against a peer median of 20.4x. Its EV/EBITDA of 26.3x compares with a peer median of 27.8x. The comparison uses 4 peers: QUALCOMM Incorporated, Texas Instruments Incorporated, Microchip Technology Incorporated and Marvell Technology Inc., as of 2026-09-05 to 2026-09-08.
Industry capital spending equaled 4.4% of revenue and 1.27 times depreciation as of 2026-09-01, retrieved 2026-09-01.
The favorable cycle requires continued industrial growth and delivery of the higher FY2026 and FY2027 revenue expectations. That would improve cost absorption and cash generation.
Industrial contraction would reverse the largest market's contribution to growth. Distributor disruption could amplify the downturn by reducing shipments before costs adjust.
Industrial was the largest FY2025 market, while automotive supplied material diversification. This mix increases recovery leverage but does not remove cycle risk.6
No new allocation; reduce existing exposure. The report-date price of $362.25 exceeds the $196.19 Fair value.3
Keep exposure falling while price exceeds Fair value, and use the stated operating breaches for a full exit.
The report-date price of $362.25 stands above the $196.19 Fair value.3
Avoid adding and use strength to reduce exposure while valuation remains above Fair value.
Positive cash flow supports distributions, but debt above cash and the valuation gap limit the case for holding.34
Sell because the report-date price materially exceeds Fair value.3
Near-term estimates improved, but direct annual support ends at FY2027 and does not justify the report-date valuation.
Capture your own thesis, position size, and follow-up questions. Stays on this device, only you can see it.
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
If this hypothetical reset occurred, investors would demand a higher return from unchanged future cash flows. That would reduce their present value and lower value per share.
Current:9.9218% on 2026-09-08
Alert ifMore than two percentage points higher within 12 months
If this prospective estimate break occurred, it would signal weaker expected demand. Lower sales would absorb less of the operating-cost base, pressuring profit and free cash flow.
Current:$18.18 billion mean as of 2026-09-08
Alert ifBelow $17.00 billion for two consecutive post-event snapshots
If this prospective contraction persisted, the largest operating market would subtract from consolidated growth. Lower sales would reverse fixed-cost absorption and reduce earnings and free cash flow.
Current:$4.93 billion of FY2025 revenue
Alert ifBelow 0% for two consecutive issuer fiscal years
An adverse channel event could reduce shipments and pricing power before costs resize, compressing operating profit and cash generation across the recovery.
Current:24% of FY2025 revenue
Alert ifAny disclosed loss, adverse repricing, or in-sourcing event at the next issuer disclosure
| Unproven customer-retention mechanisms | high | Beyond FY2027 | Treat switching costs, integration, pricing power, and retention benefits as unproven. Reassess only if company disclosure links a structural mechanism to customer retention or lower unit costs. |
Convert the revenue and margin path into after-tax free cash flow, discount the annual per-share amounts and terminal value at WACC, then adjust for signed net debt per current share.
Limitation: Terminal value is 61.8% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Value each distinct segment, subtract corporate overhead and net debt, add probability-weighted optionality, and divide by diluted shares.
Discount the explicit dividend path and its Gordon-growth terminal value at cost of equity.
Limitation: Terminal value is 71.8% of this model's value, above the 60% level at which the methodology flags concentration; the value leans on the years beyond the explicit forecast.
Solve for the growth rate that makes the model value equal the report-date share price.
Add depreciation to net income, subtract maintenance capex, divide by diluted shares, and apply a normalized valuation multiple.
This path needs durable growth after direct annual forecast evidence ends. Industrial contraction or weakening estimates would cause the upside to fade.
Contraction would reverse operating leverage.6
Positive cash supports distributions and debt service.4
A relationship change could reduce shipments.6
| FY2035 |
|---|
| Revenue | $15.09B | $18.18B | $20.08B | $21.55B | $22.76B | $23.80B | $24.73B | $25.55B | $26.29B | $26.95B |
| Operating income | $4.65B | $5.60B | $6.19B | $6.64B | $7.01B | $7.33B | $7.62B | $7.87B | $8.10B | $8.30B |
| NOPAT | $4.14B | $4.99B | $5.51B | $5.92B | $6.25B | $6.53B | $6.79B | $7.01B | $7.22B | $7.40B |
| Residual cash after reinvestment policy | $4.14B | $4.99B | $5.51B | $5.92B | $6.25B | $6.53B | $6.79B | $7.01B | $7.22B | $7.40B |
| Revenue growth | 37.0% | 20.5% | 10.5% | 7.3% | 5.6% | 4.6% | 3.9% | 3.3% | 2.9% | 2.5% |
| Operating margin | 30.8% | 30.8% | 30.8% | 30.8% | 30.8% | 30.8% | 30.8% | 30.8% | 30.8% | 30.8% |
| Tax rate | 10.9% | 10.9% | 10.9% | 10.9% | 10.9% | 10.9% | 10.9% | 10.9% | 10.9% | 10.9% |
| Reinvestment rate | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Terminal growth | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% | 2.5% |
| Margin |
|---|
| ADI | Analog Devices Inc. | $175.5B | 21.5x | 12.6x | 26.3x | 12.2% | — |
| QCOM | QUALCOMM Incorporated | 16.5x | 4.1x | 15.4x | 33.8% | 18.5% | |
| TXN | Texas Instruments Incorporated | 24.3x | 12.1x | 25.5x | 35.2% | 42.6% | |
| MCHP | Microchip Technology Incorporated | 16.2x | 7.9x | 30.1x | 7.2% | 24.0% | |
| MRVL | Marvell Technology Inc. | 33.3x | 21.3x | 69.3x | 16.5% | 16.7% |
| Below 0% for two consecutive fiscal years |
| If industrial revenue contracts for two consecutive fiscal years, exit remaining exposure because the largest operating market would subtract from consolidated growth and weaken fixed-cost absorption.6 |
| Annual free cash flow | Below $0 for a fiscal year | Exit remaining exposure because distributions and debt service would lose cash support.4 |
