A month has gone by since the last earnings report for Agilent Technologies (A Quick QuoteA - Free Report) . Shares have lost about 6.4% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Agilent due for a breakout? 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 catalysts.

Agilent Q3 Earnings Beat Estimates

Agilent Technologies reported third-quarter fiscal 2022 earnings of $1.34 per share, beating the Zacks Consensus Estimate by 11.7%. The bottom line increased 21.8% year over year and 18.6% sequentially.

Revenues of $1.72 billion surpassed the Zacks Consensus Estimate by 4.9%. The top line was up 8% on a reported basis and 13% on a core basis from the respective year-ago quarter’s levels. Revenues increased 6.9% from the prior quarter’s figure.

Top-line growth was driven by continued strong growth in the pharma market. Also, solid momentum in the chemical & energy market remained positive.

Segmental Top-Line Details

Agilent has three reporting segments, namely Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG), and Diagnostics and Genomics Group (DGG).

LSAG: The segment accounted for $1.02 billion or 59% of its total revenues, up 14% on a reported basis and 18% on a core basis from the respective prior-year quarter’s levels. This was driven by a positive environment across the Pharma, Chemical & Energy, Food, and Environmental & Forensics markets. Growth in LC & LC-MS instruments and Spectroscopy, Consumables and Chemistries, and Cell Analysis platforms also aided results.

ACG: Revenues from the segment were $359 million, accounting for 21% of total revenues. Also, the top line improved 5% year over year on a reported basis and 10% on a core basis, driven by growth in instrument sales. Strong performance of lab activity in China also drove the segment’s results.

DGG: Revenues decreased 2% year over year on a reported basis but rose 3% on a core basis to $340 million, accounting for the remaining 20% of total revenues. The metric was negatively impacted by the shutdown of NASD facility. Nevertheless, strong performance across clinical cancer testing and NGS businesses benefited the results.

Operating Results

For the fiscal third quarter, gross margin in the LSAG segment expanded 10 basis points (bps) on a year-over-year basis to 60.5%. DGG’s gross margin expanded 50 bps on a year-over-year basis to 54%. ACG gross margin expanded 40 bps to 47%.

Research & development costs were $116 million, up 2.7% year over year. Selling, general & administrative expenses were $412 million, up 2.2% year over year.

Operating margin for the fiscal third quarter was 27.5%, expanding 150 bps on a year-over-year basis.

Segment wise, the operating margin for LSAG was up 260 bps year over year to 30.5%. The DGG segment’s operating margin contracted 110 bps on a year-over-year basis to 21.5%. ACG’s operating margin was 24.6%, which expanded 20 bps from the year-ago quarter’s level.

Balance Sheet

As of Jul 31, 2022, Agilent’s cash and cash equivalents were $1.07 billion, down from $1.19 billion on Apr 30, 2022.

Accounts receivables were $1.35 billion at the end of third-quarter fiscal 2022, up from $1.24 billion at the end of second-quarter fiscal 2022.

Long-term debt was $2.732 billion for the reported quarter, up from $2.730 billion in the prior quarter.

Outlook

For the fiscal fourth quarter, management expects revenues of $1.750-$1.775 billion, suggesting growth between 10.3% and 11.8% on a core basis from the year-ago fiscal quarter’s actuals. Non-GAAP earnings per share are expected to be $1.38-1.40.

For fiscal 2022, management anticipates revenues in the band of $6.750-$6.775 billion, implying growth of 6.8-7.2% on a reported basis and 9.9-10.3% on a core basis from the respective fiscal 2021 tallies. Management raised its guidance for non-GAAP earnings per share from $4.86-$4.93 to $5.06-$5.08.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

Currently, Agilent has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Agilent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.