Analog Devices

Methodology

Analog Devices' specialty semiconductors serve cyclical industrial and automotive markets, creating earnings volatility despite higher-margin positioning. Results fluctuate with manufacturing cycles and inventory dynamics. Using mid-cycle earnings rather than peak or trough periods provides more reliable baseline valuations for this semiconductor business.

Methodology

Analog Devices' PEG ratio swings dramatically with semiconductor demand cycles, making timing crucial for interpretation. Specialty in industrial and automotive analog chips provides steadier growth than memory or logic, but remains cyclical. Compare to analog peers like Texas Instruments to gauge relative valuation within this more defensive semiconductor segment.

Methodology

Analog Devices maintains consistent dividends that provide downside support during semiconductor downturns and enhance total returns during growth periods. Strong free cash flow from high-margin analog products supports both dividends and buybacks. PEGY better captures the investment proposition where income stability complements cyclical growth characteristics.