By William Trent, CFA of Stock Market Beat
Apparently it doesn’t take much to get Analog Devices (ADI) investors excited. Which is good, seeing as how they didn’t deliver very much in terms of earnigns.
Total revenue for the first quarter of fiscal 2007 was $692 million, which included $657 million of product revenue and $35 million of revenue from a one-time technology license. Product revenue for the first quarter of fiscal year 2007 increased approximately 6% compared to the same period one year ago and increased approximately 2% compared to the immediately prior quarter.Diluted earnings per share (EPS) for the first quarter of fiscal 2007, on a GAAP basis, was $0.44, compared to $0.32 for the same period one year ago and $0.39 for the immediately prior quarter. Non-GAAP diluted EPS for the first quarter of fiscal 2007 was $0.40, compared to $0.37 for the same period one year ago and $0.39 for the immediately prior quarter.
Revenue beat consensus estimates by $5 million, while the $0.40 in EPS compares to a $0.41 consensus according to Yahoo! Finance. Guidance wasn’t much better, calling for $640-670 in revenue (consensus = $661) and $0.37-$0.42 in non-GAAP EPS (consensus = $0.42.) We’ll leave the discussion of whether estimates should be based on non-GAAP (GAAP stands for Generally Accepted Accounting Principles, so why is non-GAAP accepted?) for another time.
Despite the relatively poor performance and guidance, shares of ADI were up after market hours. Perhaps investors are already fully discounting our concerns, or perhaps the “whisper numbers” were calling for an even bigger disappointment. Regardless of why, the shares are up on relatively weak news, which is often the signal of a bottom and never something that should be dismissed out of hand.
So we won’t. But with inventories up 14% year/year compared to just a 6% rise in sales, and an above-market valuation for a cyclical stock growing its sales at an average pace, we aren’t going to take it as the sign of the bottom either.
The author may hold a position in the securities discussed. The author’s current holdings are as follows: Long: Union Pacific (UNP) put options; Air Products (APD) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Three Five Systems (TFS); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Landstar (LSTR) put options; Plantronics (PLT) put options
Top Gaining Stocks
Top Losing Stocks