Analog Devices (ADI) Profit Margin Jumps to 20.6%, Reinforcing Bullish Narratives on Earnings Quality

Analog Devices (ADI) just posted its FY 2025 fourth-quarter results, reporting revenue of $3.1 billion and basic EPS of $1.60. Over the past year, the company has seen revenue rise from $9.4 billion to $11.0 billion and basic EPS climb from $3.30 to $4.59. With margins now at 20.6%, investors will be watching how the company leverages improved profitability going forward.

See our full analysis for Analog Devices.

Let's see how the fresh results line up with the prevailing narratives in the market, and where they might challenge conventional views.

See what the community is saying about Analog Devices

Profit Margin Expansion Outpaces Industry

• Net profit margin reached 20.6% for the trailing twelve months, up from 17.3% a year earlier, highlighting rising profitability even as revenue growth forecasts (10.1% per year) slightly lag the US market's 10.5% rate.
• Consensus narrative points to robust margin gains driven by demand for high-margin analog and mixed-signal solutions as industrial end markets recover.
  • This margin momentum supports the view that ADI is benefiting from automation, AI, and green energy developments, which in turn strengthens earnings growth beyond previous trends.
  • Analysts note that these improvements reinforce expectations of resilient profits, but also remind investors to maintain realistic assumptions as growth rates normalize toward industry averages.
• Consensus narrative: See how strong margin gains stack up against analyst expectations and sector trends. 📊 Read the full Analog Devices Consensus Narrative.

Valuation Premium and Analyst Targets

• With a Price-To-Earnings Ratio of 55.7x, Analog Devices trades well above the DCF fair value of $162.25 and the US semiconductor industry average of 35.8x. The current consensus analyst price target stands at 280.31, while the latest share price is $257.92.
• Consensus narrative observes that the slim 7.2% gap between the current share price and analyst price target suggests the market has already priced in much of the profit and margin growth story.
  • Analysts flag that for the current price to be justified in the future, earnings must more than double by 2028 and trade at a lower P/E multiple, introducing some tension as expectations are already lofty.
  • The relatively small upside remaining may limit near-term share movements unless profit growth surpasses already ambitious projections.

Insider Selling and Dividend Attractiveness

• Dividend yield remains a steady 1.54%, but notable insider selling has occurred in the past three months, even as overall earnings and margins have climbed year-over-year.
• Consensus narrative acknowledges that while ADI’s stable dividend and strong earnings make it a favorite among dividend investors, the insider selling puts focus on whether current valuations and recent performance justify increased confidence in future results.
  • Ongoing share repurchases and robust EPS gains point to company strength, but significant insider selling may raise investor questions about leadership’s view on future upside.
  • This contrast leaves income-focused investors weighing reliable payouts against possible red flags in management’s share activity.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Analog Devices on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Analog Devices research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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Analog Devices’ lofty valuation has left limited upside, with high expectations built into the share price and only modest gains projected by analysts.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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