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

Agilent Technologies ' A 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 and Amazon.com, Inc. AMZN , sporting a Zacks Rank #1 (Strong Buy), while SMC Corporation SMCAY , 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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