Yahoo Finance Agilent (A) Down 2.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Agilent Technologies (A). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Agilent due for a breakout? 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 drivers.
Agilent Q1 Earnings Beat Estimates
Agilent Technologies reported first-quarter fiscal 2023 earnings of $1.37 per share, beating the Zacks Consensus Estimate by 4.6%. The bottom line increased 13% from the year-ago fiscal quarter’s level.
Revenues of $1.76 billion surpassed the Zacks Consensus Estimate of $1.69 billion. The top line was up 5% on a reported basis and 10% on a core basis from the respective year-ago fiscal quarter’s levels.
Top line growth was driven by growing momentum across the pharma and applied markets. Strong performances in China and Europe also contributed well.
Segmental Top Line Details
Agilent has three reporting segments, namely Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG) and Diagnostics and Genomics Group (DGG).
LSAG: The segment accounted for $1.03 billion or 58.8% of its total revenues, up 6% on a reported basis and 11% on a core basis from the respective prior-year fiscal quarter’s levels. This was driven by solid momentum in the Chemical & Advanced Materials market, owing to strong demand for materials used in the manufacturing of semiconductors and batteries. Strength in LC+LCMS, and spectroscopy also aided results.
ACG: Revenues from the segment were $381 million, accounting for 21.7% of total revenues. Also, the top line improved by 6% from the prior-year fiscal quarter’s reading on a reported basis and 13% on a core basis, driven by service business growth on the back of strong customer-lab operations. Further, strong renewals for support contracts and solid momentum across the enterprise services business were positives.
DGG: Revenues increased 0.9% from the prior-year fiscal quarter’s figure on a reported basis and 8% on a core basis to $342 million, accounting for the remaining 19.5% of total revenues. Segmental growth was attributed to strengths in the NASD and IHC cancer diagnostics.
Operating Results
For the fiscal first quarter, gross margin in the LSAG segment expanded by 70 basis points (bps) to 61.2% from the prior-year fiscal quarter’s number. ACG gross margin expanded 100 bps to 48.5%. DGG’s gross margin contracted 160 bps from the year-ago fiscal quarter’s actuals to 51.2%.
Research & development (R&D) costs were $123 million, up 5.1% from the prior-year fiscal quarter’s number. Selling, general & administrative (SG&A) expenses were $419 million, up 0.5% from the year-earlier fiscal quarter’s figure. As a percentage of revenues, R&D expenses expanded 10 bps year over year to 7%. Meanwhile, SG&A expenses contracted 100 bps year over year to 23.9%.
Operating margin for the fiscal first quarter was 24.3%, which expanded 180 bps from the year-earlier fiscal quarter’s figure.
Segment wise, the operating margin for LSAG was up 150 bps from the year-earlier fiscal quarter’s level at 30.4%. ACG’s operating margin was 27%, up 180 bps from the year-ago fiscal quarter’s level. DGG segment’s operating margin contracted 290 bps to 17.2% from the year-ago fiscal quarter’s figure.
Balance Sheet & Cash Flow
As of Jan 31, 2023, Agilent’s cash and cash equivalents were $1.25 billion, up from $1.05 billion on Oct 31, 2022.
Accounts receivables were $1.46 billion at the end of first-quarter fiscal 2023, up from $1.41 billion at the end of fourth-quarter fiscal 2022.
Long-term debt was $2.733 billion for the reported quarter, which remained flat as compared with the prior fiscal quarter.
Agilent generated $296 million in cash from operations during the reported quarter.
Further, it returned $142 million to shareholders, out of which dividend payments accounted for $67 million and share repurchases accounted for the remaining $75 million.
Guidance
For the fiscal second quarter of 2023, management expects revenues of $1.655-$1.680 billion, suggesting growth between 6% and 7.5% on a core basis from the year-ago fiscal quarter’s actuals.
Non-GAAP earnings per share are expected to be $1.24-$1.27.
For fiscal 2023, management raised its revenue guidance from the band of $6.90-$7 billion to $7.03-$7.1 billion, implying a growth of 2.7-3.7% on a reported basis and 5.5-6.5% on a core basis from the respective fiscal 2022 figures.
Management also raised the guidance for fiscal 2023 non-GAAP earnings per share from $5.61-$5.69 to $5.65-$5.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Agilent has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Agilent has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Agilent Technologies, Inc. (A) : Free Stock Analysis Report
