For investors wondering whether Analog Devices at around US$337 a share is still a solid opportunity or already pricing in too much optimism, this article explains how its current price compares with several valuation yardsticks.
The stock has posted returns of 5.2% over the last 7 days, 12.3% over 30 days, 23.1% year to date, 59.7% over 1 year, 84.3% over 3 years and 124.6% over 5 years. This recent momentum is front of mind for many investors.
Recent news flow around Analog Devices has largely focused on its role as a major analog and mixed signal semiconductor supplier, with attention on how its products fit into areas such as industrial automation, communications and automotive electronics. This backdrop helps frame why the stock’s strong multi period returns are drawing closer scrutiny from investors who are asking whether the current price fairly reflects those themes.
On Simply Wall St’s valuation checks, Analog Devices currently scores 0 out of 6 for being assessed as undervalued. Next, we will look at how different valuation approaches line up on this stock and then finish with a way of thinking about value that goes beyond any single model.
Analog Devices scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow model takes the cash a business is expected to generate in the future, then discounts those cash flows back to today to estimate what the company might be worth right now.
For Analog Devices, the model starts with last twelve months free cash flow of about US$4.0b. Analyst and extrapolated projections suggest free cash flow in the range of roughly US$4.7b to US$6.4b over the next several years, with an estimated US$5.7b by 2030. Simply Wall St uses a 2 Stage Free Cash Flow to Equity approach, where only the first part of the forecast relies on analyst estimates and the later years are extrapolated.
After discounting these projected cash flows back to today, the DCF output indicates an intrinsic value of about US$121.99 per share. Compared with the current share price of around US$337, this implies the stock is assessed as very fully priced, with the model pointing to a 176.3% overvaluation on this basis.
For a profitable company like Analog Devices, the P/E ratio is a useful way to relate what you pay for the stock to the earnings it is currently generating. Investors usually expect a higher P/E when they see stronger growth potential or lower perceived risk, and a lower P/E when growth expectations are more modest or risks feel higher.
Analog Devices is trading on a P/E of 72.65x. That sits above the Semiconductor industry average of 43.44x and also above the peer group average of 66.45x. On the surface, that suggests the market is assigning a richer earnings multiple to Analog Devices than to many of its listed peers.
Simply Wall St’s Fair Ratio for Analog Devices is 33.50x. This is a proprietary estimate of what a more typical P/E might look like after accounting for factors such as the company’s earnings growth profile, profit margins, risk characteristics, industry and market cap. Because it blends these elements, the Fair Ratio can be a more tailored anchor point than a simple comparison with industry or peer averages. Setting 72.65x against the Fair Ratio of 33.50x, Analog Devices currently screens as expensive on this metric.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories that tie your view of Analog Devices’ future revenue, earnings and margins to a forecast and a fair value that you can compare directly with the current share price.
On Simply Wall St, Narratives sit inside the Community page and give you an accessible framework to spell out your assumptions, link them to a financial model, and then see how your own fair value stacks up against the latest market price so you can decide whether the gap between the two looks attractive or not.
Because Narratives on the platform are updated as new information comes through, such as earnings or news, they help you keep a living view of value that moves with the story rather than relying on a single static snapshot.
For example, one Analog Devices Narrative on Simply Wall St currently anchors on a fair value of about US$375.00 while another comes in closer to US$204.70, which shows how two investors looking at the same company can tell very different stories and reach very different views on what the shares are worth today.
For Analog Devices, we will make it easy for you with previews of two leading Analog Devices Narratives:
🐂 Analog Devices Bull Case
Fair value in this bullish narrative: US$375.00
Implied discount to this fair value versus the last close of US$337.10: 10.1% undervalued
Assumed annual revenue growth: 18.31%
Leans into a stronger autos, automation and IoT cycle, with higher content per device and what the author sees as room for margins to rise meaningfully over time.
Assumes earnings could reach US$6.0b by around 2028 with profit margins above 30%, supported by pricing power, deeper customer integration and expanded internal manufacturing capacity.
Highlights risks around geopolitics, cyclicality, cost inflation and regulation, and ties the US$375.00 fair value to a future P/E assumption that still comes down from today’s levels.
🐻 Analog Devices Bear Case
Fair value in this more measured narrative: US$313.31
Implied premium to this fair value versus the last close of US$337.10: 7.6% overvalued
Assumed annual revenue growth: 12.85%
Builds on the same autos and AI themes but with more cautious revenue and margin assumptions, treating current conditions as a cyclical recovery supported by longer term demand.
Sees earnings at about US$4.9b by 2028 with margins in the low 30% range and a future P/E in the low 40s, which together point to a fair value below the current share price.
Flags competition, geopolitics, higher investment needs and inventory swings as key sources of potential earnings volatility, and frames the consensus price target as close to where the stock already trades.
Put side by side, these Narratives provide a range of outcomes to test your own view against, rather than relying on a single model. Once you have a sense of which story appears closer to your expectations on growth, margins and risk, you can decide how comfortable you are with the current US$337.10 share price relative to those fair values.
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.
