We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Agilent (A) Up 4.8% Since Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Agilent Technologies, Inc. (A - Free Report) . Shares have added about 4.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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 Beats on Q1 Earnings & Revenues
Agilent’s fiscal first-quarter 2017 earnings per share of 53 cents beat the Zacks Consensus Estimate by 4 cents. Earnings were up 15.2% year over year.
Revenues
Agilent’s fiscal first-quarter 2017 revenues of $1.07 billion were down 4.0% sequentially but up 3.8% year over year. Revenues came above management’s guided range of $1.04 billion to $1.06 billion and the Zacks Consensus Estimate of $1.05 billion.
Revenue growth was supported by continued strength in Chemical & Energy business and better-than-expected growth in China.
Revenues by Geography
Asia/Pacific contributed 36% of the total fiscal first-quarter revenue and was down 5.9% sequentially but up 10% year over year. Americas contributed 34% and was down 7.6% sequentially but up 5.5% year over year. Europe accounted for the remaining 30% and was up 3.3% sequentially but down 4.5% year over year.
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 having failed 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 $540 million or 51% of total revenue, up 3% year over year. The increase was driven by strong performance in the pharma, food, chemical and energy markets.
Revenues from ACG came in at $363 million or 34% of total revenue, reflecting 6% year-over-year growth. Both services and consumables witnessed growth across all geographical regions.
Revenues from DGG came in at $164 million or 15% of total revenue. The segment was up 4% year over year, driven by strength in pathology and nucleic acid solutions. All businesses under this group (Dako, Genomics and Nucleic Acid Solutions) performed well. Margins
The pro forma gross margin for the quarter was 55.1%, down 30 basis points (bps) sequentially but up 20 bps year over year.
Operating expenses (research & development and selling, general & administrative expenses) in the quarter were $368 million, 3.7% lower than the year-ago quarter. As a result, adjusted operating margin of 21.2% was up 100 bps year over year.
Net Income
Agilent generated pro forma net income of $168 million, or 15.7% of sales, compared with $121 million, or 11.8%, a year ago. 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 $172 million (53 cents per share) compared with $153 million (46 cents) in the year-ago quarter.
Balance Sheet
Exiting the fiscal first quarter, inventories were $551 million, up from $533 in the prior quarter. Agilent’s long-term debt was $1.80 billion at the end of the quarter. Cash and cash equivalents were $2.24 billion compared with $2.29 billion in the prior quarter.
Net cash provided by operating activities was $116 million and capital expenditure was $32 million.
Guidance
Agilent gave guidance for the fiscal second quarter and fiscal 2017.
For the fiscal second quarter, Agilent expects revenues between $1.04 billion and $1.06 billion, and non-GAAP earnings per share in the range of 47 cents to 49 cents. Analysts polled by Zacks expect earnings of 49 cents per share and revenues of $1.05 billion.
For fiscal 2017, Agilent projects revenues between $4.33 billion and $4.35 billion and non-GAAP earnings per share in the range of $2.10–$2.16. Analysts polled by Zacks expect earnings of $2.13 per share and revenues to the tune of $4.33 billion.
Recommendation
Agilent delivered strong fiscal first-quarter 2017 results, with both the top and the bottom-line surpassing the Zacks Consensus Estimate.
The company’s decision to divest/wind up underperforming businesses has enhanced its focus on the new Agilent, while enabling expansion of the recurring revenue base and diversification of geographic and industrial operations for growth. Also, the company’s focus on aligning investments so as to be oriented toward more attractive growth avenues and innovative product launches is a positive.
In addition, we 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.
Foreign currency headwinds may hurt revenues and profits, but the company seems prepared to counter them.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one upward revision for the current quarter compared to five downward.
At this time, Agilent's stock has an average Growth Score of 'C', a grade with the same score on the momentum front. 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 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Agilent (A) Up 4.8% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Agilent Technologies, Inc. (A - Free Report) . Shares have added about 4.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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 Beats on Q1 Earnings & Revenues
Agilent’s fiscal first-quarter 2017 earnings per share of 53 cents beat the Zacks Consensus Estimate by 4 cents. Earnings were up 15.2% year over year.
Revenues
Agilent’s fiscal first-quarter 2017 revenues of $1.07 billion were down 4.0% sequentially but up 3.8% year over year. Revenues came above management’s guided range of $1.04 billion to $1.06 billion and the Zacks Consensus Estimate of $1.05 billion.
Revenue growth was supported by continued strength in Chemical & Energy business and better-than-expected growth in China.
Revenues by Geography
Asia/Pacific contributed 36% of the total fiscal first-quarter revenue and was down 5.9% sequentially but up 10% year over year. Americas contributed 34% and was down 7.6% sequentially but up 5.5% year over year. Europe accounted for the remaining 30% and was up 3.3% sequentially but down 4.5% year over year.
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 having failed 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 $540 million or 51% of total revenue, up 3% year over year. The increase was driven by strong performance in the pharma, food, chemical and energy markets.
Revenues from ACG came in at $363 million or 34% of total revenue, reflecting 6% year-over-year growth. Both services and consumables witnessed growth across all geographical regions.
Revenues from DGG came in at $164 million or 15% of total revenue. The segment was up 4% year over year, driven by strength in pathology and nucleic acid solutions. All businesses under this group (Dako, Genomics and Nucleic Acid Solutions) performed well.
Margins
The pro forma gross margin for the quarter was 55.1%, down 30 basis points (bps) sequentially but up 20 bps year over year.
Operating expenses (research & development and selling, general & administrative expenses) in the quarter were $368 million, 3.7% lower than the year-ago quarter. As a result, adjusted operating margin of 21.2% was up 100 bps year over year.
Net Income
Agilent generated pro forma net income of $168 million, or 15.7% of sales, compared with $121 million, or 11.8%, a year ago. 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 $172 million (53 cents per share) compared with $153 million (46 cents) in the year-ago quarter.
Balance Sheet
Exiting the fiscal first quarter, inventories were $551 million, up from $533 in the prior quarter. Agilent’s long-term debt was $1.80 billion at the end of the quarter. Cash and cash equivalents were $2.24 billion compared with $2.29 billion in the prior quarter.
Net cash provided by operating activities was $116 million and capital expenditure was $32 million.
Guidance
Agilent gave guidance for the fiscal second quarter and fiscal 2017.
For the fiscal second quarter, Agilent expects revenues between $1.04 billion and $1.06 billion, and non-GAAP earnings per share in the range of 47 cents to 49 cents. Analysts polled by Zacks expect earnings of 49 cents per share and revenues of $1.05 billion.
For fiscal 2017, Agilent projects revenues between $4.33 billion and $4.35 billion and non-GAAP earnings per share in the range of $2.10–$2.16. Analysts polled by Zacks expect earnings of $2.13 per share and revenues to the tune of $4.33 billion.
Recommendation
Agilent delivered strong fiscal first-quarter 2017 results, with both the top and the bottom-line surpassing the Zacks Consensus Estimate.
The company’s decision to divest/wind up underperforming businesses has enhanced its focus on the new Agilent, while enabling expansion of the recurring revenue base and diversification of geographic and industrial operations for growth. Also, the company’s focus on aligning investments so as to be oriented toward more attractive growth avenues and innovative product launches is a positive.
In addition, we 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.
Foreign currency headwinds may hurt revenues and profits, but the company seems prepared to counter them.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one upward revision for the current quarter compared to five downward.
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 an average Growth Score of 'C', a grade with the same score on the momentum front. 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 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.