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Agilent (A) Down 3.7% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Agilent Technologies, Inc. (A - Free Report) . Shares have lost about 3.7% in that time frame, outperforming the market.
Will the recent negative trend continue leading up to their next earnings release, or is the stock due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Agilent Beats on Q4 Earnings & Revenues, Lowers Guidance
Agilent’s fiscal fourth-quarter 2017 earnings per share of 67 cents beat the Zacks Consensus Estimate by 4 cents. Earnings increased 14% year over year.
During the quarter, the company said that the integration of U.K.-based Cobalt Light Systems is on track. It will strengthen Agilent’s presence in the high-growth Raman spectroscopy market. The deal complements Agilent’s product expansion efforts with the promise of helping it offer better services to its pharmaceutical and biopharma customers.
We also remain positive on Agilent’s broad-based portfolio and increased focus on segments with higher growth potential. Further, the company continues to introduce high-margin products.
Revenues
Agilent’s fiscal fourth-quarter 2017 revenues of $1.19 billion increased 8% sequentially and 7% year over year. Revenues were above the management’s guided range of $1.15-$1.17 billion and the Zacks Consensus Estimate of $1.17 billion.
Revenue growth was supported by strong growth across all product lines with particular strength in Europe and Americas.
Revenues by Segment
Agilent now has three reporting segments — Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG) and Diagnostics and Genomics Group (DGG). Its Electronic Measurement Group (EMG) segment was spun off as Keysight Technologies, an independent publicly traded company. Agilent also exited the Nuclear Magnetic Resonance business after failing to meet growth and profitability goals. The company divested or shut down underperforming units to streamline operations.
In the reported quarter, LSAG was the largest contributor and accounted for $573 million or 49% of total revenues, reflecting an increase of 5% year over year. This was driven by strong performances in the chemical and energy, academia, government and food end markets.
Revenues from ACG came in at $404 million or 34% of total revenues, reflecting an increase of 9% year over year. Both services and consumables witnessed growth across all geographical regions.
Non-GAAP revenues from DGG came in at $208 million or remaining 18% of total revenues. The segment was up 9% year over year, driven by strong demand for pathology products and companion diagnostics services.
Margins
The pro forma gross margin for the quarter was 56.1%, up 100 basis points (bps) sequentially and 70 bps year over year.
Operating expenses (research & development and selling, general & administrative expenses) in the quarter were $393 million, 7% higher than the year-ago quarter.As a result, adjusted operating margin was 23.3%, increasing 0.8% from the year-ago quarter of 22.5%.
Net Income
Agilent generated pro forma net income of $218 million (67 cents per share) compared with $193 million (59 cents) in the year-ago quarter. Our pro forma estimate excludes acquisition-related costs, restructuring charges, amortization of intangibles and other one-time items as well as tax adjustments.
With these above-mentioned items included, GAAP net income was $177 million (54 cents per share) compared with $126 million (38 cents) in the year-ago quarter.
Balance Sheet
Exiting the fiscal fourth quarter, inventories were $575 million, up from $566 in the prior quarter. Agilent’s long-term debt was $1.80 billion at the end of the quarter. Cash and cash equivalents were $2.68 billion compared with $2.56 billion in the prior quarter.
Net cash provided by operating activities was $288 million and capital expenditure was $58 million.
In the reported quarter, the company paid $43 million in dividends. There was no share repurchase activity during that time.
Guidance
Agilent provided guidance for fiscal first quarter of 2018.
Agilent expects revenues between $1.145 billion and $1.165 billion, and non-GAAP earnings per share in the range of 55-57 cents for the fiscal first quarter. Analysts polled by Zacks expect revenues of $1.14 billion and earnings of 60 cents per share.
For fiscal 2018, Agilent projects revenues in the range of $4.720-$4.740 billion and non-GAAP earnings per share in the range of $2.50-$2.56.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.
At this time, Agilent's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
While estimates have been broadly trending upward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Agilent (A) Down 3.7% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Agilent Technologies, Inc. (A - Free Report) . Shares have lost about 3.7% in that time frame, outperforming the market.
Will the recent negative trend continue leading up to their next earnings release, or is the stock due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Agilent Beats on Q4 Earnings & Revenues, Lowers Guidance
Agilent’s fiscal fourth-quarter 2017 earnings per share of 67 cents beat the Zacks Consensus Estimate by 4 cents. Earnings increased 14% year over year.
During the quarter, the company said that the integration of U.K.-based Cobalt Light Systems is on track. It will strengthen Agilent’s presence in the high-growth Raman spectroscopy market. The deal complements Agilent’s product expansion efforts with the promise of helping it offer better services to its pharmaceutical and biopharma customers.
We also remain positive on Agilent’s broad-based portfolio and increased focus on segments with higher growth potential. Further, the company continues to introduce high-margin products.
Revenues
Agilent’s fiscal fourth-quarter 2017 revenues of $1.19 billion increased 8% sequentially and 7% year over year. Revenues were above the management’s guided range of $1.15-$1.17 billion and the Zacks Consensus Estimate of $1.17 billion.
Revenue growth was supported by strong growth across all product lines with particular strength in Europe and Americas.
Revenues by Segment
Agilent now has three reporting segments — Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG) and Diagnostics and Genomics Group (DGG). Its Electronic Measurement Group (EMG) segment was spun off as Keysight Technologies, an independent publicly traded company. Agilent also exited the Nuclear Magnetic Resonance business after failing to meet growth and profitability goals. The company divested or shut down underperforming units to streamline operations.
In the reported quarter, LSAG was the largest contributor and accounted for $573 million or 49% of total revenues, reflecting an increase of 5% year over year. This was driven by strong performances in the chemical and energy, academia, government and food end markets.
Revenues from ACG came in at $404 million or 34% of total revenues, reflecting an increase of 9% year over year. Both services and consumables witnessed growth across all geographical regions.
Non-GAAP revenues from DGG came in at $208 million or remaining 18% of total revenues. The segment was up 9% year over year, driven by strong demand for pathology products and companion diagnostics services.
Margins
The pro forma gross margin for the quarter was 56.1%, up 100 basis points (bps) sequentially and 70 bps year over year.
Operating expenses (research & development and selling, general & administrative expenses) in the quarter were $393 million, 7% higher than the year-ago quarter.As a result, adjusted operating margin was 23.3%, increasing 0.8% from the year-ago quarter of 22.5%.
Net Income
Agilent generated pro forma net income of $218 million (67 cents per share) compared with $193 million (59 cents) in the year-ago quarter. Our pro forma estimate excludes acquisition-related costs, restructuring charges, amortization of intangibles and other one-time items as well as tax adjustments.
With these above-mentioned items included, GAAP net income was $177 million (54 cents per share) compared with $126 million (38 cents) in the year-ago quarter.
Balance Sheet
Exiting the fiscal fourth quarter, inventories were $575 million, up from $566 in the prior quarter. Agilent’s long-term debt was $1.80 billion at the end of the quarter. Cash and cash equivalents were $2.68 billion compared with $2.56 billion in the prior quarter.
Net cash provided by operating activities was $288 million and capital expenditure was $58 million.
In the reported quarter, the company paid $43 million in dividends. There was no share repurchase activity during that time.
Guidance
Agilent provided guidance for fiscal first quarter of 2018.
Agilent expects revenues between $1.145 billion and $1.165 billion, and non-GAAP earnings per share in the range of 55-57 cents for the fiscal first quarter. Analysts polled by Zacks expect revenues of $1.14 billion and earnings of 60 cents per share.
For fiscal 2018, Agilent projects revenues in the range of $4.720-$4.740 billion and non-GAAP earnings per share in the range of $2.50-$2.56.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter compared to one lower.
Agilent Technologies, Inc. Price and Consensus
Agilent Technologies, Inc. Price and Consensus | Agilent Technologies, Inc. Quote
VGM Scores
At this time, Agilent's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
While estimates have been broadly trending upward for the stock, the magnitude of these revisions has been net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.