⚠ Adjusted Earnings Leave Out $3.24 a ShareModerate threat

Analog Devices (ADI) — threat to the moat

ADI's adjusted EPS of $7.79 in fiscal 2025 left out $3.24 a share of acquisition costs, and the 24.8 times forward multiple the market quotes is built on it.

ADI guides investors to one earnings figure and files another, and the difference is the acquisitions. In fiscal 2025 reported diluted EPS was $4.56 and adjusted diluted EPS $7.791; acquisition-related expenses accounted for $3.24 of the gap2. In fiscal 2024 the figures were $3.28 and $6.383.

Analog Devices diluted EPS, reported and adjusted ($)3.28FY2024 reported6.38FY2024 adjusted4.56FY2025 reported7.79FY2025 adjustedAnalog Devices Q4 FY2025 results release, reconciliation
Adjusted EPS is about 70% above reported.

The company's guidance follows the adjusted figure. For the fourth quarter of fiscal 2026 it planned "reported EPS to be $3.14, +/-$0.15, and adjusted EPS to be $3.86"4, with the guide including "$405 million of adjustments related to acquisition related expenses"5.

Adjusted earnings are a reasonable guide to cash, since amortisation costs nothing now. But they treat the purchase price as if it were free, and the forward multiple the market quotes, 24.84 times6, is built on the adjusted number. On reported trailing earnings the multiple is 46.967. A reader who uses the lower figure to judge value is judging a company that never paid $44 billion for its size.

The gap will narrow when amortisation falls after fiscal 2029, argued on The Amortisation Cliff After 2029. Until then, the right question is not which figure is correct but which one the owner is paid on. Dividends and buybacks are paid from cash, which favours the adjusted view; returns on capital are earned on everything paid, which favours the reported one.

The warning would be a widening gap. If acquisition-related expenses per share rise above the $3.24 of fiscal 2025 in any year after the Empower and Alif deals close, the adjusted figure will be leaving out more, not less.

References
  1. ReportedIn fiscal 2025 reported diluted EPS was $4.56 and adjusted diluted EPS $7.79; acquisition-related expenses accounted for $3.24 of the gap.
    Analog Devices fourth-quarter and fiscal 2025 results release, Form 8-K exhibit 99.1 - full-year income statement, adjusted measures, cash flow, capital returns and balance sheet. — FY2025 · publ. 25 November 2025 · source ↗
  2. ReportedIn fiscal 2025 reported diluted EPS was $4.56 and adjusted diluted EPS $7.79; acquisition-related expenses accounted for $3.24 of the gap.
    Analog Devices fourth-quarter and fiscal 2025 results release, Form 8-K exhibit 99.1 - full-year income statement, adjusted measures, cash flow, capital returns and balance sheet. — FY2025 · publ. 25 November 2025 · source ↗
  3. ReportedIn fiscal 2024 the figures were $3.28 and $6.38.
    Analog Devices fourth-quarter and fiscal 2025 results release, Form 8-K exhibit 99.1 - full-year income statement, adjusted measures, cash flow, capital returns and balance sheet. — FY2025 · publ. 25 November 2025 · source ↗
  4. ReportedFor the fourth quarter of fiscal 2026 it planned "reported EPS to be $3.14, +/-$0.15, and adjusted EPS to be $3.86", with the guide including "$405 million of adjustments related to acquisition related expenses".
    Analog Devices third-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - revenue by end market, margins, EPS, cash flow, balance sheet and fourth-quarter guidance - highlights, income statement, adjusted measures and fourth-quarter guidance. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  5. ReportedFor the fourth quarter of fiscal 2026 it planned "reported EPS to be $3.14, +/-$0.15, and adjusted EPS to be $3.86", with the guide including "$405 million of adjustments related to acquisition related expenses".
    Analog Devices third-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - revenue by end market, margins, EPS, cash flow, balance sheet and fourth-quarter guidance - highlights, income statement, adjusted measures and fourth-quarter guidance. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  6. Third-party estimateBut they treat the purchase price as if it were free, and the forward multiple the market quotes, 24.84 times, is built on the adjusted number.
    stockanalysis.com, Analog Devices statistics, 28 September 2026: 484.57 million shares, trailing P/E 46.96, forward P/E 24.84, P/S 13.80, P/B 5.71, P/FCF 38.81, return on invested capital 10.96% (its own trailing method), institutions 92.63%. — September 2026 · publ. 28 September 2026 · source ↗
  7. Third-party estimateOn reported trailing earnings the multiple is 46.96.
    stockanalysis.com, Analog Devices statistics, 28 September 2026: 484.57 million shares, trailing P/E 46.96, forward P/E 24.84, P/S 13.80, P/B 5.71, P/FCF 38.81, return on invested capital 10.96% (its own trailing method), institutions 92.63%. — September 2026 · publ. 28 September 2026 · source ↗
Sources
Generated September 29, 2026