Agilent (A) Surpasses Earnings And Revenue Estimates In Q4

Agilent Technologies’ (NYSE:A) fiscal fourth-quarter 2018 earnings of 81 cents per share surpassed the Zacks Consensus Estimate by 8 cents. Earnings also increased 20.9% year over year.

Moreover, the company’s fiscal fourth-quarter 2018 revenues of $1.29 billion increased 8.8% year over year. Revenues were ahead of management’s guided range of $1.24-$1.26 billion and also outpaced the Zacks Consensus Estimate of $1.256 billion.

The year-over-year revenue growth was supported by notable improvement across all its product lines and regions.

Coming to share price performance, the stock has lost 3% on a year-to-date basis compared with the industry’s decline of 3.1%.

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 $597 million or 46% of the total revenues, reflecting an increase of 8% from the prior-year quarter. This was driven by strength across all major end markets, platforms and regions.

Revenues from ACG came in at $441 million or 34% of its total revenues, reflecting an increase of 9% year over year. Both services and consumables witnessed growth across all geographical regions.

Revenues from DGG came in at $256 million, accounting for the remaining 20% of the total revenues. The segment was up 9% from the year-ago quarter, led by growth in pharma along with strength in genomics and NASD products.

Operating Results

Gross margin in the quarter was 57.8%, up 170 basis points (bps) year over year. The increase was due to higher revenues and a favorable product mix.

Operating expenses (research &development as well as selling, general & administrative expenses) were $460 million, 11.1% higher than the year-ago quarter.

As a result, adjusted operating margin was 25.2%, up 190 bps year over year.

Balance Sheet

At the end of the fiscal fourth quarter, inventories totaled $638 million, reflecting an increase from $623 million in the prior-year quarter. Agilent’s long-term debt was $1.8 billion at the end of the quarter. Cash and cash equivalents were $2.2 billion compared with $2.1 billion in fiscal third-quarter 2018.

In the reported quarter, the company paid $47 million in dividends. In addition, Agilent approved a new share repurchase program of up to $1.75 billion, which will commence on Nov 21, 2018, replacing the previous program.

Guidance

Agilent provided guidance for fiscal first-quarter and full fiscal 2019.

The company expects revenues between $1.265 billion and $1.280 billion, and earnings per share in the range of 71-73 cents for the fiscal first quarter. The Zacks Consensus Estimate is pegged at $1.28 billion for revenues and 73 cents for earnings per share.

For fiscal 2019, Agilent projects revenues in the range of $5.13-$5.17 billion and earnings per share within $3-$3.05.

The Zacks Consensus Estimate for earnings stands at $2.97 per share and that of revenues is $5.19 billion.

Zacks Rank and Other Stocks to Consider

Currently, Agilent has a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include boohoo group plc (OTC:BHOOY) , QuinStreet, Inc. (NASDAQ:QNST) and AMETEK, Inc. (NYSE:A) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for boohoo group, QuinStreet and AMETEK is currently pegged at 25%, 25% and 11.18%, respectively.

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