A month has gone by since the last earnings report for Agilent Technologies (
A Quick Quote A - Free Report) . Shares have lost about 5.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.
Agilent Q4 Earnings Beat Estimates
Agilent Technologies reported fourth-quarter fiscal 2022 earnings of $1.53 per share, beating the Zacks Consensus Estimate by 10.1%. The bottom line increased 26.4% year over year and 14.2% sequentially.
Revenues of $1.85 billion surpassed the Zacks Consensus Estimate by 4.5%. The top line was up 11% on a reported basis and 17% on a core basis from the respective year-ago quarter’s levels. Revenues increased 7.6% from the prior quarter’s figures.
Top-line growth was driven by continued strong growth in the pharma and applied markets. Also, robust demand across all end markets in China remained a 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 $1.12 billion or 60% of its total revenues, up 16% on a reported basis and 22% on a core basis from the respective prior-year quarter’s levels. This was driven by a positive environment across the Pharma, Chemical & Advanced Materials, Food, and Environmental & Forensics markets. Growth in LC, LC-MS, GC and GC-MS instruments also aided results. ACG: Revenues from the segment were $381 million, accounting for 21% of total revenues. Also, the top line improved 7% year over year on a reported basis and 14% on a core basis, driven by increase in service agreement attach rate. DGG: Revenues increased 3% year over year on a reported basis and 8% on a core basis to $352 million, accounting for the remaining 19% of total revenues. The segmental growth was attributed to strength in NASD and Genomics portfolio. Operating Results
For the fiscal fourth quarter, gross margin in the LSAG segment expanded 70 basis points (bps) on a year-over-year basis to 60.6%. ACG gross margin expanded 30 bps to 47%. DGG’s gross margin contracted 150 bps on a year-over-year basis to 51%.
Research & development (R&D) costs were $119 million, up 2.6% year over year. Selling, general & administrative (S,G&A) expenses were $422 million, up 8.5% year over year. As a percentage of revenues, the R&D and S,G&A expenses contracted 55 bps and 61 bps each to 6.4% and 22.8%, respectively.
Operating margin for the fiscal fourth quarter was 29.1%, up 260 bps on a year-over-year basis.
Segment wise, the operating margin for LSAG was up 400 bps year over year to 32.7%. The ACG’s operating margin was 27.4%, up 110 bps from the year-ago quarter’s level. DGG segment’s operating margin contracted 130 bps on a year-over-year basis to 19.5%.
As of Oct 31, 2022, Agilent’s cash and cash equivalents were $1.05 billion, down from $1.07 billion on Jul 31, 2022.
Accounts receivables were $1.41 billion at the end of fourth-quarter fiscal 2022, up from $1.35 billion at the end of third-quarter fiscal 2022.
Long-term debt was $2.733 billion for the reported quarter, up from $2.732 billion in the prior quarter.
For the fiscal first quarter, management expects revenues of $1.68-$1.70 billion, suggesting growth between 6.8% and 8% on a core basis from the year-ago fiscal quarter’s actuals.
Non-GAAP earnings per share are expected to be $1.29-$1.31.
For fiscal 2023, management anticipates revenues in the band of $6.90-$7 billion, implying growth of 0.8-2.2% on a reported basis and 5-6.5% on a core basis from the respective fiscal 2022 tallies.
Management expects guidance for non-GAAP earnings per share of $5.61-$5.69.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
Currently, Agilent 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Agilent has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.