Keysight Technologies (KEYS) Q1 2025 Earnings Preview

Report Date: February 25, 2025, After Market Close

Keysight Technologies is set to release its first-quarter earnings for 2025, with investors keenly anticipating the company’s financial performance. The upcoming report promises to shed light on Keysight’s ongoing strategies and market position in a rapidly evolving industry.

Key Metrics to Watch

---

Earnings Expectations

Investors and analysts have set a Q1 EPS Estimate of $1.69, aligning closely with the current consensus. The projections range narrowly between $1.67 and $1.71, reflecting market confidence in Keysight’s ability to maintain consistent earnings growth. Compared to the year-ago EPS of $1.63, the expected metric indicates a robust growth of 3.75%, underscoring the company’s steady financial trajectory.

Revenue Projections

Revenue is another critical indicator for evaluating Keysight’s performance. The Q1 Revenue Estimate stands at $1.28 billion, with a tight forecast range of $1.27 billion to $1.28 billion. This projected revenue reflects a slight increase from the year-ago revenue of $1.26 billion, marking an expected growth of 1.37%. This modest uptick suggests continued demand for Keysight’s products and services in the competitive market landscape.

Beyond the Headlines

---

Recent Performance Track Record

Keysight Technologies has consistently outperformed market expectations in recent quarters, demonstrating its ability to deliver beyond analysts’ forecasts:

• Q4 2024: Surpassed expectations by $0.08 per share, a remarkable 5.01% surprise.
• Q3 2024: Exceeded estimates by $0.22 per share, an impressive 16.56% surprise.
• Q2 2024: Marginally beat projections by $0.02 per share, a 1.58% surprise.
• Q1 2024: Outperformed by $0.04 per share, a 2.67% surprise.

This consistent overperformance highlights Keysight’s strong operational execution and strategic initiatives that resonate well with market demands.

Financial Health Indicators

Keysight’s financial stability remains a cornerstone of its business resilience. The company boasts a strong balance sheet, characterized by:

• Total Cash: $1.80 billion, translating to $10.37 per share, providing ample liquidity for operational needs and strategic investments.
• Current Ratio: 2.98x, indicating a healthy ability to cover short-term liabilities with its current assets.
• Quick Ratio: 1.96x, further reinforcing liquidity strength by excluding inventory from current assets.
• Debt-to-Equity: 39.77%, reflecting a conservative approach to leveraging and maintaining financial flexibility.

Profitability Metrics

Keysight demonstrates robust profitability, underscored by strong margin metrics:

• Gross Margin: 62.92%, showcasing efficient production and cost management.
• EBITDA Margin: 22.37%, highlighting operational profitability before accounting for non-operational expenses.
• Operating Margin: 18.10%, indicating effective control over operating expenses relative to revenue.
• Profit Margin: 12.33%, reflecting the company’s ability to convert revenue into net income.

These metrics collectively paint a picture of a company that not only generates substantial revenue but also manages its costs effectively to sustain healthy profit levels.

Analyst Sentiment

---

Market analysts hold a consensus rating of Buy for Keysight Technologies, signaling strong confidence in the company’s future performance. The average price target stands at $180.43, with individual targets ranging from a high of $200.00 to a low of $157.00. This range reflects varying degrees of optimism among analysts, with most projecting significant upside potential.

Currently, 12 analysts are covering the stock, providing diverse perspectives on its valuation and growth prospects. In the past 30 days, there have been 8 upward and 1 downward EPS revisions, indicating a predominantly positive outlook and reinforcing the consensus buy rating.

“Keysight’s consistent earnings beat and strong financial health make it a compelling investment opportunity in the technology sector.”

Forward Outlook

---

Looking ahead, Keysight Technologies projects a positive trajectory for the full fiscal year 2025:

• FY2025 EPS Estimate: $6.94, representing a substantial 10.69% growth compared to the previous year.
• FY2025 Revenue Estimate: $5.25 billion, forecasting a 5.41% growth, driven by expanding market demand and strategic product launches.

Analysts are optimistic about continued growth into FY2026, expecting further acceleration:

• EPS Growth: 16.24%, suggesting enhanced profitability and earnings growth.
• Revenue Growth: 7.15%, indicating strong sales performance and market expansion.

These forward-looking estimates reflect confidence in Keysight’s strategic initiatives and its ability to navigate market challenges effectively.

Investment Considerations

---

When evaluating Keysight Technologies as a potential investment, several key factors merit consideration:

1. Market Position: As a leading electronic measurement company, Keysight maintains a dominant presence in the test and measurement industry, benefiting from technological advancements and industry demand.
2. Cash Generation: The company’s strong free cash flow of $586 million underscores its operational efficiency and ability to fund ongoing projects, dividends, and buybacks.
3. Growth Trajectory: While near-term growth projections are modest, longer-term estimates suggest accelerating momentum, driven by innovation and market expansion.
4. Balance Sheet Strength: A healthy cash position provides Keysight with the flexibility to pursue strategic investments and return value to shareholders through dividends and share repurchases.

Investors should closely monitor management’s commentary on critical areas, including:

• Supply chain conditions: Insights into potential disruptions or improvements in the supply chain.
• End-market demand trends: Understanding shifts in customer demand across various sectors.
• R&D investments: Evaluating the company’s commitment to innovation and product development.
• Capital allocation priorities: Assessing how Keysight plans to deploy its financial resources for optimal growth and shareholder value.

Note: All financial figures are in USD unless otherwise stated.

Additional Resources

View Keysight Technologies Inc Stock Chart

You can visit Keysight Technologies Inc website here

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. All trading and investment decisions should be made based on your own research, experience, and risk tolerance.