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Keysight (KEYS) Up 1.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Keysight (KEYS - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Keysight 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 drivers.
Keysight Q4 Earnings & Revenues Beat Estimates, Up Y/Y
Keysight Technologies reported fourth-quarter fiscal 2021 non-GAAP earnings of $1.82 per share, outpacing the Zacks Consensus Estimate by 10.3% and increasing 12.3% year over year.
Revenues increased 6% year over year to $1.29 billion, surpassing the Zacks Consensus Estimate by 1.4%. The upside can be attributed to double-digit growth across segments as well as geographies served.
Core revenues (excluding the impact of currency and revenues from acquisitions in a year’s time) rose 5% on a year-over-year basis.
Top Line in Detail
Orders increased 21% on a year-over-year basis to $1.49 billion in the reported quarter.
Communications Solutions Group (“CSG”) revenues were $919 million, up 2% year over year. The increase was driven by continued strength across the 5G and aerospace, defense and government end-markets, as well as investment in 400G and 800G research & development.
Electronic Industrial Solutions Group (“EISG”) revenues increased 18% year over year to $375 million. Solid demand for the company’s semiconductor measurement solutions, and next-generation automotive and energy technologies drove top-line growth.
In terms of end markets, Aerospace, Defense and Government revenues were unchanged on a year-over-year basis at $297 million. Commercial Communications (“CC”) climbed 3% year over year to $622 million. Electronic Industrial (“EI”) revenues were $375 million, up 18% year over year.
In terms of geography, revenues from Americas were $546 million, up 9% (up 8% on a core basis) year over year, driven by strength in EI and CC.
Revenues from Europe increased 4% (up 3% on a core basis) on a year-over-year basis to $193 million.
Revenues from Asia Pacific increased 4% (up 4% on a core basis) on a year-over-year basis to $555 million.
Operating Details
Keysight reported non-GAAP gross margin of 66% that expanded 10 basis points (bps) in the fiscal fourth quarter. CSG gross margin of 66.1% contracted 20 bps while EISG’s gross margin of 65.7% expanded 100 bps on a year-over-year basis.
Non-GAAP operating expenses were $456 million in the fiscal fourth quarter of 2021, up 2.2% year over year.
Non-GAAP operating margin expanded 140 bps to 30.7%. While CSG operating margin contracted 50 bps, EISG’s operating margin expanded 570 bps on a year-over-year basis.
Balance Sheet & Cash Flow
As of Oct 31, 2021, Keysight had cash & cash equivalents of $2.05 billion compared with $2.15 billion as of Jul 31, 2021.
Long-term debt, as of Oct 31, was $1.79 billion, unchanged from Jul 31.
Cash flow from operations in the reported quarter was $368 million compared with $257 million reported in the prior quarter.
In fourth-quarter fiscal 2021, Keysight acquired approximately 4.4 million shares on the open market at an average price of $154.29, totaling $673 million.
Guidance
For first-quarter fiscal 2022, Keysight anticipates revenues in the range of $1.225-$1.245 billion. Non-GAAP earnings are projected between $1.50 and $1.56 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Keysight has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Keysight has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Keysight (KEYS) Up 1.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Keysight (KEYS - Free Report) . Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Keysight 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 drivers.
Keysight Q4 Earnings & Revenues Beat Estimates, Up Y/Y
Keysight Technologies reported fourth-quarter fiscal 2021 non-GAAP earnings of $1.82 per share, outpacing the Zacks Consensus Estimate by 10.3% and increasing 12.3% year over year.
Revenues increased 6% year over year to $1.29 billion, surpassing the Zacks Consensus Estimate by 1.4%. The upside can be attributed to double-digit growth across segments as well as geographies served.
Core revenues (excluding the impact of currency and revenues from acquisitions in a year’s time) rose 5% on a year-over-year basis.
Top Line in Detail
Orders increased 21% on a year-over-year basis to $1.49 billion in the reported quarter.
Communications Solutions Group (“CSG”) revenues were $919 million, up 2% year over year. The increase was driven by continued strength across the 5G and aerospace, defense and government end-markets, as well as investment in 400G and 800G research & development.
Electronic Industrial Solutions Group (“EISG”) revenues increased 18% year over year to $375 million. Solid demand for the company’s semiconductor measurement solutions, and next-generation automotive and energy technologies drove top-line growth.
In terms of end markets, Aerospace, Defense and Government revenues were unchanged on a year-over-year basis at $297 million. Commercial Communications (“CC”) climbed 3% year over year to $622 million. Electronic Industrial (“EI”) revenues were $375 million, up 18% year over year.
In terms of geography, revenues from Americas were $546 million, up 9% (up 8% on a core basis) year over year, driven by strength in EI and CC.
Revenues from Europe increased 4% (up 3% on a core basis) on a year-over-year basis to $193 million.
Revenues from Asia Pacific increased 4% (up 4% on a core basis) on a year-over-year basis to $555 million.
Operating Details
Keysight reported non-GAAP gross margin of 66% that expanded 10 basis points (bps) in the fiscal fourth quarter. CSG gross margin of 66.1% contracted 20 bps while EISG’s gross margin of 65.7% expanded 100 bps on a year-over-year basis.
Non-GAAP operating expenses were $456 million in the fiscal fourth quarter of 2021, up 2.2% year over year.
Non-GAAP operating margin expanded 140 bps to 30.7%. While CSG operating margin contracted 50 bps, EISG’s operating margin expanded 570 bps on a year-over-year basis.
Balance Sheet & Cash Flow
As of Oct 31, 2021, Keysight had cash & cash equivalents of $2.05 billion compared with $2.15 billion as of Jul 31, 2021.
Long-term debt, as of Oct 31, was $1.79 billion, unchanged from Jul 31.
Cash flow from operations in the reported quarter was $368 million compared with $257 million reported in the prior quarter.
In fourth-quarter fiscal 2021, Keysight acquired approximately 4.4 million shares on the open market at an average price of $154.29, totaling $673 million.
Guidance
For first-quarter fiscal 2022, Keysight anticipates revenues in the range of $1.225-$1.245 billion. Non-GAAP earnings are projected between $1.50 and $1.56 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Keysight has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Keysight has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.