Keysight (KEYS) Up 0.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Keysight (KEYS). Shares have added about 0.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Keysight due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.
Keysight Q3 Earnings Beat Estimates, Revenues Up Y/Y on Solid Demand
Keysight reported solid third-quarter fiscal 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate.
The leading electronic design and testing solutions provider reported a 36% year-over-year increase in revenues, supported by broad-based demand across its key end markets and continued customer investments in emerging technologies. Artificial Intelligence (AI) infrastructure, next-generation connectivity and increasing adoption of advanced technologies continued to boost the company’s performance.
Net Income
Net income on a GAAP basis was $397 million or $2.30 per share compared with $191 million or $1.10 per share in the prior-year quarter. Strong top-line growth boosted the bottom line during the quarter.
Non-GAAP net income in the reported quarter was $531 million or $3.07 per share compared with $297 million or $1.72 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $2.46.
Revenues
Net sales during the quarter increased to $1.85 billion from $1.35 billion in the year-ago quarter, owing to healthy growth in both the Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG) segments. The top line beat the Zacks Consensus Estimate of $1.75 billion. Total orders were $2.09 billion compared with $1.34 billion in the year-ago quarter.
CSG generated $1.35 billion in revenues, up from the year-ago quarter’s $940 million. The 43% year-over-year increase was driven by strong performance in wireline and wireless, as well as continued momentum in AI infrastructure and aerospace, defense and government. Emerging 6G and non-terrestrial network opportunities also supported demand.
EISG segment’s revenues increased to $501 million from $412 million in the prior-year quarter, driven by AI-related investments and capacity expansion in advanced semiconductors, along with solid demand for software-defined vehicles, cybersecurity and EV charging solutions.
By region, Asia-Pacific revenues aggregated $810 million compared with $569 million in the prior-year quarter. The company reported a 29% year-over-year improvement in revenues from the Americas to $729 million. Revenues from Europe were $307 million, up 41% from the year-ago quarter's $217 million.
During the quarter, revenues from Aerospace, Defense and Government increased to $339 million from $296 million in the year-ago quarter. The company reported a 56% year-over-year improvement in revenues from Commercial Communications to $1.01 billion. Electronic Industrial generated $501 million in revenues, up from the year-ago quarter’s $412 million.
Other Details
During the quarter, the company’s non-GAAP gross profit totaled $1.27 billion, up from $864 million in the year-ago quarter, with respective gross margins of 69% and 63.9%. Non-GAAP operating income totaled $613 million compared with $338 million in the year-ago period, with operating margins of 33.2% and 25%, respectively.
CSG reported non-GAAP operating income of $458 million compared with $246 million in the year-ago period. EISG non-GAAP operating income increased to $155 million from $92 million in the prior-year quarter.
Cash Flow & Liquidity
In the third quarter of fiscal 2026, Keysight generated $437 million of net cash from operating activities compared with $322 million in the year-ago quarter. In the first nine months of fiscal 2026, the company generated $1.38 billion in cash compared with $1.18 billion in the year-ago period. As of July 31, 2026, the company had $2.61 billion in cash and cash equivalents and $1.82 billion of long-term debt.
Outlook
For the fourth quarter of fiscal 2026, Keysight expects revenues in the range of $1.93-$1.95 billion. Non-GAAP earnings per share are estimated to be between $3.34 and $3.40.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 27.69% due to these changes.
VGM Scores
At this time, Keysight has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, the stock has a score of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Keysight has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
