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Will Top-Line Decline Hurt Keysight's (KEYS) Q4 Earnings?
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Keysight Technologies, Inc. (KEYS - Free Report) is set to release fourth-quarter fiscal 2023 results on Nov 20, after market close. In the last reported quarter, the company delivered an earnings surprise of 7.35%. It pulled off a trailing four-quarter earnings surprise of 8.34%, on average. It is expected to record a revenue contraction year over year, owing to demand softness in some consumer electronics end markets and inventory adjustments.
The persistence of business uncertainty worldwide, stemming from macroeconomic challenges and rising geopolitical volatility, will likely affect revenues. However, Keysight’s strong emphasis on innovation and development of cutting-edge testing solutions is likely to have partially reversed the declining trend.
Factors at Play
During the quarter, Keysight unveiled a cutting-edge Phased Array Antenna Control and Calibration solution designed for efficient testing of satellite communication systems. The technology is the latest addition to the Keysight S7601A antenna measurement toolset. The company also successfully completed a 3GPP Release 16 compliant Sidelink radio conformance test in collaboration with Ettifos.
Sidelink communication technology is a crucial element for the C-V2X (Cellular vehicle to everything), which has a wide range of applications in the context of connected cars, autonomous driving and public safety. Such initiatives are likely to have had a favorable impact on the quarterly earnings.
In the quarter-under-review, Keysight has taken a decisive step forward in wireless testing by launching a compact, four-channel vector signal generator. Dubbed N5186A MXG, the product is an ideal solution for a broad range of commercial and aerospace defense applications. It has also joined forces with Synopsys to develop an enhanced cybersecurity validation solution for loT (Internet of Things) devices. These developments are likely to have contributed to top-line growth in the quarter.
In the fiscal fourth quarter, the leading provider of electronic design automation software tools introduced an advanced automated software test solution, Eggplant Test 7.0. The solution seeks to address the challenges faced by quality assurance teams while testing mobile apps simultaneously on multiple devices. The portfolio expansion is likely to strengthen its position in the industry.
However, consumers’ cautious spending behavior, weakness in smartphone and PC computing markets induced by inventory corrections and macroeconomic headwinds are major concerns. The company’s dependence on the demand environment of China and rising Sino-U.S. trade tension are likely to have impacted its operations. Its international footprint exposes it to foreign exchange volatility. These factors are expected to have had a negative impact on its fiscal fourth-quarter revenues.
Our estimate for the Electronic Industrial Solutions Group segment is pegged at $419.4 million, indicating 7% year-over-year decline. Our estimate for the Communications Solutions Group segment is pegged at $876.8 million, implying a decline from $970 million reported in the year-ago quarter.
For the October quarter, the Zacks Consensus Estimate for total revenues is pegged at $1,298 million, down from $1,443 million reported in the prior-year quarter. The consensus estimate for adjusted earnings per share stands at $1.87, suggesting a decrease from the prior-year quarter’s figure of $2.14.
Earnings Whispers
Our proven model predicts a likely earnings beat for Keysight this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is exactly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are a few other companies you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Post Holdings (POST - Free Report) is +2.23% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 16.
The Earnings ESP for Walmart Inc. (WMT - Free Report) is +0.81% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 16.
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Will Top-Line Decline Hurt Keysight's (KEYS) Q4 Earnings?
Keysight Technologies, Inc. (KEYS - Free Report) is set to release fourth-quarter fiscal 2023 results on Nov 20, after market close. In the last reported quarter, the company delivered an earnings surprise of 7.35%. It pulled off a trailing four-quarter earnings surprise of 8.34%, on average. It is expected to record a revenue contraction year over year, owing to demand softness in some consumer electronics end markets and inventory adjustments.
The persistence of business uncertainty worldwide, stemming from macroeconomic challenges and rising geopolitical volatility, will likely affect revenues. However, Keysight’s strong emphasis on innovation and development of cutting-edge testing solutions is likely to have partially reversed the declining trend.
Factors at Play
During the quarter, Keysight unveiled a cutting-edge Phased Array Antenna Control and Calibration solution designed for efficient testing of satellite communication systems. The technology is the latest addition to the Keysight S7601A antenna measurement toolset. The company also successfully completed a 3GPP Release 16 compliant Sidelink radio conformance test in collaboration with Ettifos.
Sidelink communication technology is a crucial element for the C-V2X (Cellular vehicle to everything), which has a wide range of applications in the context of connected cars, autonomous driving and public safety. Such initiatives are likely to have had a favorable impact on the quarterly earnings.
In the quarter-under-review, Keysight has taken a decisive step forward in wireless testing by launching a compact, four-channel vector signal generator. Dubbed N5186A MXG, the product is an ideal solution for a broad range of commercial and aerospace defense applications. It has also joined forces with Synopsys to develop an enhanced cybersecurity validation solution for loT (Internet of Things) devices. These developments are likely to have contributed to top-line growth in the quarter.
In the fiscal fourth quarter, the leading provider of electronic design automation software tools introduced an advanced automated software test solution, Eggplant Test 7.0. The solution seeks to address the challenges faced by quality assurance teams while testing mobile apps simultaneously on multiple devices. The portfolio expansion is likely to strengthen its position in the industry.
However, consumers’ cautious spending behavior, weakness in smartphone and PC computing markets induced by inventory corrections and macroeconomic headwinds are major concerns. The company’s dependence on the demand environment of China and rising Sino-U.S. trade tension are likely to have impacted its operations. Its international footprint exposes it to foreign exchange volatility. These factors are expected to have had a negative impact on its fiscal fourth-quarter revenues.
Our estimate for the Electronic Industrial Solutions Group segment is pegged at $419.4 million, indicating 7% year-over-year decline. Our estimate for the Communications Solutions Group segment is pegged at $876.8 million, implying a decline from $970 million reported in the year-ago quarter.
For the October quarter, the Zacks Consensus Estimate for total revenues is pegged at $1,298 million, down from $1,443 million reported in the prior-year quarter. The consensus estimate for adjusted earnings per share stands at $1.87, suggesting a decrease from the prior-year quarter’s figure of $2.14.
Earnings Whispers
Our proven model predicts a likely earnings beat for Keysight this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is exactly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Keysight Technologies Inc. Price and EPS Surprise
Keysight Technologies Inc. price-eps-surprise | Keysight Technologies Inc. Quote
Zacks Rank: Keysight has a Zacks Rank #3.
Other Stocks to Consider
Here are a few other companies you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season:
Legend Biotech (LEGN - Free Report) is set to release its quarterly numbers on Nov 20. It has an Earnings ESP of +10.40% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Post Holdings (POST - Free Report) is +2.23% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 16.
The Earnings ESP for Walmart Inc. (WMT - Free Report) is +0.81% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Nov 16.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.