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Keysight (KEYS) Up 1.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Keysight (KEYS - Free Report) . Shares have added about 1.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Keysight Outpaces Q2 Earning and Revenue Estimates
Keysight 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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Keysight has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, 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 1.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Keysight (KEYS - Free Report) . Shares have added about 1.8% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Keysight Outpaces Q2 Earning and Revenue Estimates
Keysight 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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Keysight has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision has been net zero. Notably, Keysight has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.