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Keysight (KEYS) Tops Q4 Earnings Estimates on Record Revenues

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

Quarter Details

GAAP net income improved to $299 million or $1.66 per share from $282 million or $1.52 per share in the year-ago quarter, driven by top-line growth. Non-GAAP net income in the reported quarter was a record high at $386 million or $2.14 per share compared with $338 million or $1.82 per share in the year-earlier quarter. The bottom line beat the Zacks Consensus Estimate of $1.99.

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

Revenues were up 11.5% year over year to $1,443 million, with solid growth across all regions, beating the consensus estimate of $1,400 million. During the quarter, orders were record high at $1,570 million, up 5% year over year, owing to the strength and resiliency of the business model led by strategic efforts to diversify the industry exposure.

GAAP net income in fiscal 2022 was $1,124 million or $6.18 per share compared with $894 million or $4.78 per share in fiscal 2021, while the respective tallies for non-GAAP earnings were $1,388 million or $7.63 per share and $1,164 million or $6.23 per share. Revenues in fiscal 2022 were $5,420 million, up from $4,941 million in fiscal 2021.

Operating Details

The Communications Solutions Group (CSG) segment generated $992 million in revenues compared with $919 million in the prior-year quarter. The record revenues were attributable to innovation dynamics and growth across all businesses and regions. The Electronic Industrial Solutions Group (EISG) segment generated $451 million in revenues compared with $375 million in the prior-year quarter. The double-digit growth was primarily driven by momentum from continued investments in next-generation technologies across automotive, industrial IoT and semiconductor end markets.

During the quarter, Keysight achieved a non-GAAP gross margin of 64.2% and a non-GAAP operating margin of 29.9%. CSG reported a non-GAAP gross margin of 65.9%, while EISG reported a non-GAAP gross margin of 60.2%. CSG's non-GAAP operating margin was 29.1% and EISG’s non-GAAP operating margin was 31.6%.

Cash Flow & Liquidity

In fiscal 2022, Keysight generated $1,144 million in cash from operating activities compared with $1,322 million a year ago. As of Oct 31, 2022, the company had $2,042 million in cash and cash equivalents with $1,793 million of long-term debt compared with the respective tallies of $2,052 million and $1,791 million in the prior-year period.

Guidance

For the first quarter of fiscal 2023, Keysight expects revenues in the range of $1.36-$1.38 billion. Non-GAAP earnings are estimated between $1.81 and $1.87 per share.

Zacks Rank & Stocks to Consider

Keysight currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TESSCO Technologies Incorporated TESS, sporting a Zacks Rank #1, delivered an earnings surprise of 126.1%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 44.3% since November 2021.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.

Harmonic Inc. HLIT, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 48.6% since March 2021.

Harmonic provides video delivery software, products, system solutions and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.

AudioCodes Ltd. AUDC, sporting a Zacks Rank #1, is likely to benefit from the secular tailwinds related to IP-based communications. Incorporated in 1992 and headquartered in Lod, Israel, it offers advanced communications software, products and productivity solutions for the digital workplace. It has a long-term earnings growth expectation of 9%.

AudioCodes It aims to leverage its long-term partnership with Microsoft to further strengthen its market position. It is also likely to benefit from its continued focus on high-margin businesses.


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