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Keysight (KEYS) Outpaces Q3 Earnings and Revenue Estimates

Zacks Equity Research
·4-min read

Keysight Technologies, Inc.  KEYS reported impressive third-quarter fiscal 2022 (ended Jul 31, 2022) results, beating both the top-line and bottom-line estimates. The strong performance during the quarter was backed by solid order growth and sustained demand across all end markets and regions. Also, the company successfully navigated the supply chain and geopolitical disruptions, which contributed to its robust performance.

Quarter Details

Revenues reported in the quarter were $1,376 million, beating the Zacks Consensus Estimate of $1,344 million and growing 10% year over year. The Communications Solutions Group generated $970 million in revenues compared with $875 million in the prior-year quarter, reflecting growth of 11%. The rise was attributable to innovation dynamics and growth across all businesses and regions. The Electronic Industrial Solutions Group generated $406 million in revenues compared with $371 million in the prior-year quarter, up 10%. The double-digit growth was primarily driven by momentum from continued investments in next-generation technologies across automotive, industrial IoT and semiconductor end markets.

GAAP net income was $338 million or $1.87 per share compared with $254 million or $1.36 per share in the year-ago quarter. Non-GAAP net income reported during the quarter was $363 million or $2.01 per share, beating the Zacks Consensus Estimate by 22 cents, up 30.5% from the prior-year quarter. During the quarter, the orders grew 12% on a year-over-year basis.

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Keysight Technologies Inc. Price, Consensus and EPS Surprise

Keysight Technologies Inc. Price, Consensus and EPS Surprise
Keysight Technologies Inc. Price, Consensus and EPS Surprise

Keysight Technologies Inc. price-consensus-eps-surprise-chart | Keysight Technologies Inc. Quote

Operating Details

During the quarter, Keysight achieved a Non-GAAP gross margin of 65% and an operating margin of 30%. CSG reported a Non-GAAP gross margin of 66.5%, expanding 80 basis points (bps) from the prior-year quarter while EISG reported a Non-GAAP gross margin of 61.3%, contracting 240 bps. CSG Non-GAAP operating margin of 29.6% rose 40 bps and EISG’s Non-GAAP operating margin of 31.3% expanded 30 bps.

Cash Flow & Liquidity

During the first nine months of 2022, Keysight generated $746 million cash from operating activities compared to $954 million in the prior-year period. As of Jul 31, 2022, the company had $1,847 million in cash and cash equivalents with $1,792 million of long-term debt.

Guidance

For the fourth quarter of fiscal 2022, Keysight expects revenues in the range of $1.38-$1.40 billion. Non-GAAP earnings are estimated between $1.94 and $2 per share. Full fiscal year 2022 revenue growth is expected to approach 9%. At the midpoint of fourth quarter guidance, Non-GAAP earnings per share growth for fiscal year 2022 is expected to be around 20%.

Zacks Rank & Other Stocks to Consider

Keysight currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SP Plus Corporation SP, sporting a Zacks Rank #1, is another key pick for investors. It delivered an earnings surprise of 15.7% in the previous quarter and a stellar earnings surprise of 19.5%, on average, in the trailing four quarters. SP Plus operates in Commercial and Aviation segments. It provides mobility solutions, parking management, ground transportation, baggage, and other ancillary services in North America.

Earnings estimates for the current year have moved up 16.9% since August 2021.

First Bancorp. FBP, carrying a Zacks Rank #2, delivered an earnings surprise of 17.1%, on average, in the trailing four quarters. Over the past year, the stock has risen 26.2%.

Earnings estimates for the current year have moved up 16.8% since August 2021. First Bancorp operates in six segments – Commercial and Corporate Banking, Mortgage Banking, Consumer Banking, Treasury and Investments, United States Operations and Virgin Islands Operations.

Chewy, Inc. CHWY has a Zacks Rank #1. The Zacks Consensus Estimate for Chewy current-year earnings has been revised downward by 194.6% since August 2021.


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