A month has gone by since the last earnings report for Analog Devices (ADI Quick QuoteADI - Free Report) . Shares have added about 3.9% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Analog Devices due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Analog Devices Beats Q3 Earnings & Revenue Estimates

Analog Devices reported third-quarter fiscal 2021 adjusted earnings of $1.72 per share, beating the Zacks Consensus Estimate by 6.8%. Further, the bottom line increased 26% year over year and 11.7% sequentially.

Revenues of $1.76 billion surpassed the Zacks Consensus Estimate of $1.71 billion. Also, the top line improved 21% year over year and 5.9% from the second-quarter fiscal 2021 level.

The strong performance delivered by the company across the consumer, industrial and automotive markets drove the top line.

Revenues by End Markets

Industrial: The company generated revenues of $1 billion (accounting for 57% of total revenues), which grew 29% year over year.

Communications: Revenues from the market were $288.7 million (16% of revenues), decreasing 21% year over year.

Automotive: Revenues from the market summed $290.1 million (16% of revenues), up 80% from the year-ago quarter.

Consumer: The market generated revenues of $178.2 million (10% of revenues), reflecting 16% growth on a year-over-year basis.

Operating Details

Adjusted gross margin expanded 170 basis points (bps) on a year-over-year basis to 71.6%.

Adjusted operating expenses were $492.7 million, up 22.6% from the year-ago quarter. As a percentage of revenues, adjusted operating expenses were 28%, expanding 40 bps year over year.

Adjusted operating margin expanded 130 bps on a year-over-year basis to 43.6% in the reported quarter.

Balance Sheet & Cash Flow

As of Jul 31, 2021, cash and cash equivalents were $1.5 billion, up from $1.3 billion as of May 1, 2021.

Long-term debt was $3.825 billion at the end of the fiscal third quarter compared with $3.824 billion at the end of the fiscal second quarter.

Net cash provided by operations was $630.04 million in the reported quarter, down from $736.4 million in the prior quarter.

The company generated $544 million of free cash flow in the fiscal third quarter.

Additionally, Analog Devices returned $418 million to its shareholders of which it made dividend payments of $255 million and repurchased shares worth $163 million in the fiscal third quarter.

Guidance

For fourth-quarter fiscal 2021, the company expects revenues of $1.78 billion (+/- $70 million).

Non-GAAP earnings are expected to be $1.72 (+/- $0.11) per share.

The company anticipates non-GAAP operating margins of 43.7% (+/- 100 bps).

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Analog Devices has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Analog Devices has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.