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Agilent (A) Reports In-Line Q2 Earnings, Misses on Revenues

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Agilent Technologies’ (A - Free Report) fiscal second-quarter 2018 earnings per share of 65 cents were inline with the Zacks Consensus Estimate. Earnings increased 12% year over year.

Following the fiscal second-quarter earnings results, Agilent’s share price has decreased 6.94% in after-hours trading due to weaker-than-expected earnings guidance for the fiscal third quarter.

Also, the company’s shares have declined 13.9% in the past year, underperforming the industry’s gain of 17.7%.

Revenues

Agilent’s fiscal second-quarter 2018 revenues of $1.206 billion decreased 1% sequentially but increased 9% year over year. Revenues were above management’s guided range of $1.145-$1.165 billion but slightly below the Zacks Consensus Estimate of $1.209 billion.

The year-over-year revenue growth was supported by the strong improvement across all its product lines and regions, particularly in Europe.

Revenues by Segment

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

In the reported quarter, LSAG was the largest contributor and accounted for $561 million or 47% of the total revenues, reflecting an increase of 7% from the prior-year quarter. This was driven by strong performances in the mass spectrometry and cell analysis.

Revenues from ACG came in at $426 million or 36% of the total revenues, reflecting an increase of 13% year over year. Both services and consumables witnessed growth across all geographical regions.

Non-GAAP revenues from DGG came in at $219 million and accounted for the remaining 19% of the total revenues. The segment was up 9% from the year-ago quarter, led by strength in genomics.

Margins

The pro-forma gross margin in the quarter was 55.4%, down 150 basis points (bps) sequentially and 60 bps year over year.

Operating expenses (research & development and selling, general & administrative expenses) in the quarter were $407 million, 9% higher than the year-ago quarter. As a result, adjusted operating margin was 21.7%, down 50 bps sequentially and 10 bps year over year.

Net Income

Agilent generated pro-forma net income of $212 million (65 cents per share) compared with $187 million (58 cents) in the year-ago quarter. 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 $205 million (63 cents per share) compared with $164 million (50 cents) in the year-ago quarter.

Balance Sheet

On exiting the fiscal second quarter, inventories were $594 million, down from $608 in the last reported quarter. Agilent’s long-term debt was $1.80 billion at the end of the quarter. Cash and cash equivalents were $3.01 billion compared with $2.89 billion in fiscal first-quarter 2018.

Net cash provided by operating activities was $303 million and capital expenditure totaled $48 million.

In the reported quarter, the company paid $48 million in dividends. There was no share repurchase activity during the period.

Guidance

Agilent provided guidance for fiscal third quarter of 2018.

Agilent expects revenues between $1.185 billion and $1.205 billion, and non-GAAP earnings per share in the range of 61-63 cents for the fiscal third quarter. Analysts polled by Zacks expect revenues of $1.21 billion and earnings of 65 cents per share.

For fiscal 2018, Agilent projects revenues in the range of $4.850-$4.870 billion and non-GAAP earnings per share within $2.63-$2.67.

Analysts polled by Zacks expect earnings of $4.92 per share and revenues to the tune of $2.71 billion.

Agilent Technologies, Inc. Price, Consensus and EPS Surprise

 

Agilent Technologies, Inc. Price, Consensus and EPS Surprise | Agilent Technologies, Inc. Quote

Zacks Rank and Other Stocks to Consider

Currently, Agilent has a Zacks Rank #2 (Buy). Other top-ranked stocks in the technology sector are Littelfuse, Inc. (LFUS - Free Report) and Amazon.com, Inc. (AMZN - Free Report) , sporting a Zacks Rank #1 (Strong Buy), while SMC Corporation (SMCAY - Free Report) , carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings per share growth rate for Littelfuse, Amazon and SMC Corporation is projected at 12%, 30.2% and 18%, respectively.

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