Keysight Technologies, Inc. (KEYS - Free Report) reported impressive second-quarter fiscal 2022 (ended Apr 30, 2022) results beating both the top-line and bottom-line estimates. The strong performance during the quarter was backed by the strong execution and robust end-market demand for Keysight’s high-value, differentiated solutions. Also, the company successfully navigated the supply chain and geopolitical disruptions, which contributed to the strong performance.
Quarter Details
Revenues reported in the quarter were $1,351 million, beating the Zacks Consensus Estimate of $1,302 million and growing 11% year over year. The Communications Solutions Group generated $963 million in revenues, compared with $877 million in the prior-year quarter, reflecting growth of 9.8%. The growth was attributable to the continued strong momentum in 5G R&D, ORAN, optical technologies, cyber, and signal monitoring. The Electronic Industrial Solutions Group generated $388 million in revenues compared with $344 million in the prior-year quarter, up 12.8%. The double-digit growth was primarily driven by automotive and semiconductor solutions.
The net income reported during the quarter was $1.83, beating the Zacks Consensus Estimate by 16 cents, up 27% from the prior-year quarter. The growth is a reflection of the advancement of the software-centric solutions strategy. During the quarter, the orders grew 9% on a year-over-year basis.
Operating Details
During the quarter, Keysight achieved a gross margin of 65% and an operating margin of 29%. CSG reported a gross margin of 66.2%, expanding 150 basis points (bps) from the prior-year quarter while EISG reported a gross margin of 62%, contracting 200 bps. CSG operating margin of 28.2%, jumped 280 bps from the prior-year quarter and EISG’s operating margin of 30.3% expanded 190 bps.
Cash Flow & Liquidity
During the fiscal second quarter, Keysight generated $298 million of cash from operating activities compared with $402 million in the prior-year quarter. As of April 30, 2022, the company had $1,886 million in cash and cash equivalents with $1,792 million of long-term debt.
Guidance
For the third quarter of fiscal 2022, Keysight expects revenues in the range of $1,330-$1,350 million. Non-GAAP earnings are estimated between $1.74 and $1.80 per share.
Zacks Rank & Stocks to Consider
Keysight currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Duck Creek Technologies, Inc. is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. Current-year estimates have been revised up by 400% over the past year, while that for the next year is up 40%.
The long-term earnings growth expectation for Duck Creek is 50%.
SAP SE (SAP - Free Report) , carrying a Zacks Rank #2 (Buy), is a key pick for stock investors. SAP has a long-term earnings growth expectation of 5.89%.
SAP, with its Rise with SAP solution, was adopted by clients, including Accenture, Canon Production Printing, Exide Industries Limited, NEC Corporation, Qinqin Food, Rising Auto and TELUS.
Silicon Motion Technology (SIMO - Free Report) , carrying Zacks Rank #2, is another great pick for investors. It has a long-term earnings growth expectation of 9%, with an earnings surprise of 3.8% on average in the trailing four quarters.
Silicon Motion has established itself as the leading merchant supplier of client SSD controller to module makers, including most leaders in the United States.
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Keysight Technologies, Inc. (KEYS - Free Report) reported impressive second-quarter fiscal 2022 (ended Apr 30, 2022) results beating both the top-line and bottom-line estimates. The strong performance during the quarter was backed by the strong execution and robust end-market demand for Keysight’s high-value, differentiated solutions. Also, the company successfully navigated the supply chain and geopolitical disruptions, which contributed to the strong performance.
Quarter Details
Revenues reported in the quarter were $1,351 million, beating the Zacks Consensus Estimate of $1,302 million and growing 11% year over year. The Communications Solutions Group generated $963 million in revenues, compared with $877 million in the prior-year quarter, reflecting growth of 9.8%. The growth was attributable to the continued strong momentum in 5G R&D, ORAN, optical technologies, cyber, and signal monitoring. The Electronic Industrial Solutions Group generated $388 million in revenues compared with $344 million in the prior-year quarter, up 12.8%. The double-digit growth was primarily driven by automotive and semiconductor solutions.
The net income reported during the quarter was $1.83, beating the Zacks Consensus Estimate by 16 cents, up 27% from the prior-year quarter. The growth is a reflection of the advancement of the software-centric solutions strategy. During the quarter, the orders grew 9% on a year-over-year basis.
Operating Details
During the quarter, Keysight achieved a gross margin of 65% and an operating margin of 29%. CSG reported a gross margin of 66.2%, expanding 150 basis points (bps) from the prior-year quarter while EISG reported a gross margin of 62%, contracting 200 bps. CSG operating margin of 28.2%, jumped 280 bps from the prior-year quarter and EISG’s operating margin of 30.3% expanded 190 bps.
Cash Flow & Liquidity
During the fiscal second quarter, Keysight generated $298 million of cash from operating activities compared with $402 million in the prior-year quarter. As of April 30, 2022, the company had $1,886 million in cash and cash equivalents with $1,792 million of long-term debt.
Guidance
For the third quarter of fiscal 2022, Keysight expects revenues in the range of $1,330-$1,350 million. Non-GAAP earnings are estimated between $1.74 and $1.80 per share.
Zacks Rank & Stocks to Consider
Keysight currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Duck Creek Technologies, Inc. is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. Current-year estimates have been revised up by 400% over the past year, while that for the next year is up 40%.
The long-term earnings growth expectation for Duck Creek is 50%.
SAP SE (SAP - Free Report) , carrying a Zacks Rank #2 (Buy), is a key pick for stock investors. SAP has a long-term earnings growth expectation of 5.89%.
SAP, with its Rise with SAP solution, was adopted by clients, including Accenture, Canon Production Printing, Exide Industries Limited, NEC Corporation, Qinqin Food, Rising Auto and TELUS.
Silicon Motion Technology (SIMO - Free Report) , carrying Zacks Rank #2, is another great pick for investors. It has a long-term earnings growth expectation of 9%, with an earnings surprise of 3.8% on average in the trailing four quarters.
Silicon Motion has established itself as the leading merchant supplier of client SSD controller to module makers, including most leaders in the United States.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
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