Buffett Brain · Research note
Score updated 23 Oct 2026 · analysis from 24 Sept 2026
ADI· Technology
Analog Devices
Analog Devices' 61.5% gross margin is top-quintile in its sector, but a P/E of 80.1 raises valuation concerns.
Buffett fit
Weak fit
Owner
48
Durability
40
Management
94
Price
2
Score updated 23 Oct 2026 · analysis from 24 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of Analog Devices, we'd focus on maintaining its top-quintile margins and improving , which is currently 5.8%.
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The 10-year test reveals risks in technological obsolescence and competitive pressures.
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Management has effectively managed capital, with a 5-year share count CAGR of -1.72% and a strong /Net Income ratio of 1.89.
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With an earnings yield of 1.25% and yield of 2.35%, the current valuation is stretched.
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- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1 of 61.5% is top-quintile in the technology sector.
- 2 of 27.2% exceeds the sector's top-quintile cutoff of 18.0%.
- 3Interest coverage ratio of 9.5 indicates strong ability to meet debt obligations.
- 4Net debt/EBITDA of 1.23 shows conservative .
Concerns
6- 1 ratio of 80.1 is significantly above acceptable levels for value investment.
- 2 of 5.8% is below the sector's top-quintile threshold of 14.0%.
- 35-year EPS CAGR of -4.58% indicates declining earnings.
- 4Revenue CAGR of -2.84% suggests shrinking top-line growth.
Price history
$386+122.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Analog Devices designs and sells integrated circuits and subsystems, focusing on data converters and power management. It serves automotive, communications, industrial, and consumer markets. With a net income of $2.27B on $11.02B revenue, its of 27.2% is top-quintile in the sector. The unit economics are strong, but growth is negative.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 23, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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