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ADI trades against a final fair-value range of $135.63-$284.54, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs.
Under severe macro softness, ADI's automotive and industrial segments stall. Without the 27.1% Year 1 revenueRevenueRevenue is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions. rebound, operating leverageLeverageThe proportion of debt in the company's capital structure. Commonly measured as Debt/EBITDA, Debt/Equity, or Net Debt/EBITDA. works in reverse, compressing EBITEBITEBIT is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions. margins below 30%. Terminal multipleTerminal multipleThe exit P/E or EV/EBITDA we apply to the final year of an explicit forecast. Anchored to the business's long-run quality and the prevailing risk-free rate. reverts to 14x, pushing fair valueFair valueOur composite estimate of intrinsic per-share value, blended across DCF, exit-multiple, and reverse-DCF methods. Reported as a low/mid/high range to capture model uncertainty. toward the $135 downside extreme.
The anticipated 27.13% Year 1 cyclical revenue recovery completely fails to materialize, leaving capacity severely bloated.
Market pivots away from tech hyper-growth multiples, repricing ADI to its mature industrial 14x PE mean.
| Line item | 2022-10-31 | 2023-10-31 | 2024-10-31 | 2025-10-31 | Trend |
|---|---|---|---|---|---|
| Revenue | $12.01B | $12.31B+2.5% | $9.43B-23.4% | $11.02B+16.9% | -2.8% |
| Gross profit | $7.53B | $7.88B | $5.38B | $6.77B | -3.5% |
| Operating income | $3.55B | $3.98B | $2.07B | $3.00B | -5.5% |
| Net income | $2.75B | $3.31B+20.4% | $1.64B-50.5% | $2.27B+38.4% | -6.2% |
| EPS (diluted) | $5.25 | $6.55 | $3.28 | $4.56 | -4.6% |
| EBITDA | $5.60B | $6.17B | $4.20B | $5.03B | -3.5% |
| R&D | $1.70B | $1.66B | $1.49B | $1.77B | +1.3% |
| SG&A | $1.27B | $1.27B | $1.07B | $1.26B | -0.3% |
Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
Gross margins break below historical averages due to intense price wars and persistent inventory corrections in auto and industrial segments.
| Deterioration versus the report thesis |
| Capital expenditures exceeding maintenance levels without corresponding top-line expansion. | Monitor | Deterioration versus the report thesis |
| Free cash flow yield dropping below dividend payout requirements. | Monitor | Deterioration versus the report thesis |
