Analog Devices Inc. is a global designer and manufacturer of analog, mixed‑signal and digital signal processing integrated circuits, and its financial profile is characterized by high margins, strong cash generation and conservative leverage.
The company’s profitability is a clear strength: gross margin remains elevated at about 61.5%, operating margin is roughly 27.3% and net margin sits near 22.9% (periods ending 2025 and 2022 as noted), reflecting durable pricing power and operational efficiency Profit Margin Trends.
Cash generation quality is also notable — trailing‑12‑month operating cash flow was $3.85B versus net income of $3.75B, and free cash flow margin is about 32.9%, with an operating cash conversion ratio of ~1.65x — indicating earnings translate into cash at a healthy clip Earnings Quality Analysis.
Balance sheet and liquidity metrics are conservative: interest coverage near 5.74x, debt‑to‑equity about 0.21 and a current ratio around 1.93, supporting manageable debt service and liquidity Strategic Capital Allocation.
Areas of concern include top‑line consistency and recent cash‑flow moderation. Split‑adjusted revenue per share has declined from a peak near $24.92 (Oct‑2023) to $22.31 (latest available), with recent 1‑year revenue‑per‑share growth muted at about 2.4% — a sign of slower per‑share top‑line expansion versus past years EPS Diluted & Revenue per Share.
Quarterly revenues have been lumpy — recent quarters reported $8.38B (2025‑11‑01) alongside quarters in the $2.16B–$3.26B range — and operating cash flow fell from a TTM peak of $4.82B (2023‑10‑28) to $3.85B (2024‑11‑02), underscoring volatility in near‑term operating performance and cash conversion Revenue & Net Income Chart: Cash Flow Allocation.
Return on equity has recovered from a low but remains under historical peaks at about 9.7% (period ended 2023‑07‑29), below the double‑digit highs seen earlier in the prior decade Return on Equity (ROE).
The foundation of business quality and long-term value creation
ANALOG DEVICES INC's recent quarterly results show a clear improvement in net income alongside volatile revenue reporting. Net income rose from $391.3M (period ending 2025-02-01) through mid‑2025 ($569.8M on 2025-05-03 and $518.5M on 2025-08-02) to $830.8M in the most recent quarter (period ending 2026-01-31). Revenue readings across the same window are uneven, with a large reported inflow of $8.38B for the period ending 2025-11-01 compared with $2.64B for the period ending 2025-05-03 and earlier quarter values around $2.16B–$3.26B.
Historically the series shows intermittent high-revenue quarters (for example $8.90B on 2022-10-29 and $5.97B on 2023-10-28) and periods of lower, steadier revenue in the $1.3B–$3.3B range. Net income has also varied, with prior peaks near $977.7M (2023-04-29) and $961.5M (2023-01-28) and a recent rebound to $830.8M. The most recent quarterly revenue was $8.38B. The most recent quarterly net income was $830.8M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Nov 2024 to Nov 2025, Analog Devices Inc converts approximately 61¢ of every revenue dollar into gross profit (gross margin: 61.5%).The waterfall below shows how revenue flows through various expense categories.
Period Information
Report Type: Annual (10-K)
Period: Nov 2024 to Nov 2025
Analyzing long-term margin stability and competitive positioning
ANALOG DEVICES INC's gross margin has moved down from the mid-60% range seen across much of the 2010s and early 2020s toward a lower recent reading. Gross margin was in the mid-60s (e.g., 67.0% in 2019, 66.1% in 2021) but the most recent observation shows 61.5% (period ending 2025-11-01), marking a decline from those earlier levels.
Operating and net margins show a longer-term pullback from mid-decade peaks. Operating margin exceeded 50% in 2015–2016 (51.5%—51.8%) and was near 49% in 2013, but fell into the high-20% range by 2020–2022, with the latest operating margin at 27.3% (period ending 2022-10-29). Net profit margin has been steadier in the low-to-mid 20s, with earlier peaks around 25%, and the latest reported net margin is 22.9% (period ending 2022-10-29).
Most Recent Gross Margin: 61.5%
Most Recent Operating Margin: 27.3%
Most Recent Net Profit Margin: 22.9%
Understanding Profit Margins
Between Nov 2024 and Nov 2025, Analog Devices Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
ANALOG DEVICES INC's trailing‑twelve‑month net income rose steadily from roughly $1.22B in late 2020 to $3.75B by the period ending 2023‑07‑29. Operating cash flow followed an upward path as well, increasing from about $2.01B in late 2020 to a peak of $4.82B in the period ending 2023‑10‑28, then declining into 2024 to $3.85B.
In late 2023, operating cash flow exceeded net income (approximately $4.82B vs $3.75B); in the most recent data, the two metrics are closely aligned, with operating cash flow modestly above net income. The most recent net income (TTM) was $3.75B. The most recent operating cash flow (TTM) was $3.85B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
ANALOG DEVICES INC's trailing twelve‑month ROE has recovered from a low in early 2022 and has settled in the high single digits over the most recent quarters. After falling to 3.4% for the period ended 2022-01-29, ROE rose to 5.2% (2022-07-30) and continued higher through 2023, recording 9.4% (2023-01-28), 10.1% (2023-04-29) and 9.7% (2023-07-29).
Historically, ROE was materially higher in the 2010–2016 window—peaks above 15–22.9% in 2010–2012 and around 16–17% in 2014–2016—followed by multi-year variability and the marked decline into early 2022. The subsequent inflection is the rebound into roughly high-single-digit/low-double-digit territory in 2023. The most recent ROE (period ended 2023-07-29) was 9.7%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Analogue Devices Inc’s operating cash flow on a trailing twelve-month basis shows a recent decline from a peak of $4.82B at period end 2023-10-28 to $3.85B at period end 2024-11-02, indicating lower cash generated from operations in the most recent operating-data point available.
Investing cash flow has been consistently negative in the available history and was more negative at −$657.4M at period end 2022-10-29 versus earlier outflows of −$180.5M (2020-10-31) and −$293.2M (2019-11-02), reflecting larger investing outflows in the most recent investing-data point provided.
Financing cash flow has varied quarter-to-quarter: it was −$1.71B at period end 2024-11-02 and 2025-02-01, moved to −$3.27B at period end 2025-05-03, and then to −$2.74B at period end 2025-08-02, showing increased net financing outflows in the most recent quarters. The most recent TTM values observed were Operating Cash Flow $3.85B, Investing Cash Flow −$657.4M, and Financing Cash Flow −$2.74B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
ANALOG DEVICES INC's P/E ratio shows a pronounced de-rating from multi-year elevated levels into a lower, more stable range. From 2017 through early 2022 the P/E routinely sat in the 40s–60s (peaking at 63.2x on ). A sharp inflection occurred in late 2022: the ratio fell from 44.9x on to 25.6x on , representing the largest single-quarter contraction in the series.
Over the most recent four quarters the P/E has been relatively steady in the mid-20s, with a slight uptick from 24.9x () to 26.3x (). The most recent Price-to-Earnings (P/E) ratio was 26.3x.
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.