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Agilent Approves Buyback, Hikes Div

Zacks Equity Research

Agilent Technologies Inc. (A), a broad-based original equipment manufacturer (:OEM) of test and measurement equipment, has approved a new stock repurchase program, to become effective after the existing $1 billion repurchase program concludes.

Apart from rewarding the shareholders, the new program will also reduce the dilution resulting from stocks issued as compensation to its employees.

Additionally, the company announced its decision to raise the quarterly dividend by 10% to 13.2 cents per share from 12 cents. This translates into a 10% increase from the prior dividend. The increased dividend will be paid on Jan 22, 2014, to stockholders of record on Dec 31, 2013. Prior to this announcement, Agilent had been paying a quarterly dividend of 12 cents per share.

Agilent’s business model reflects the company’s commitment toward returning value to shareholders with its strong cash generation capabilities. We believe that the continued share buybacks and dividend hike will increase investors’ enthusiasm for the shares.

Agilent’s strong balance sheet and cash flows provide financial flexibility in matters of incremental dividend, share repurchases and acquisitions. During the last concluded quarter, Agilent paid dividend worth $39 million, but did not repurchase any share.

The cash and cash equivalents were $2.68 billion at quarter-end, having increased $345 million during the quarter. The debt cap ratio was 33.8%. We remain encouraged by Agilent’s strong cash position and its ability to service its long-term debts.

Agilent reported decent fiscal fourth-quarter results, with both revenues and earnings per share surpassing our expectations. We remain positive about Agilent’s broader portfolio and increased focus on segments with higher growth potential.

Currently, Agilent has a Zacks Rank #3 (Hold). Other stocks that look attractive at the moment are Priceline.com (PCLN), Ametek Inc. (AME) and SeaWorld Entertainment, Inc. (SEAS). All these stocks carry a Zacks Rank #2 (Buy).

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