3 Sales & Earnings Growth Winners

 | Jan 17, 2022 06:39AM ET

With thousands of companies about to report their quarterly results as a new earnings season begins, let’s take a look at the KEYS

Our dependence on semiconductors and electronics accelerated dramatically during this pandemic… and it won’t be slowing down anytime soon. In fact, the demand will continue growing exponentially into the future, so we better make sure this stuff works!

That’s what Keysight Technologies (KEYS) is all about. This provider of electronic design and test instrumentation systems is part of the electronics – measuring equipment space, which is in the top 5% of the Zacks Industry Rank.

It’s two segments are the Communications Solutions Group (accounting for 74% of non-GAAP revenues in fiscal 2020) and the Electronic Industrial Solutions Group (26%). Shares of KEYS are up approximately 28% over the past year.

The company topped the Zacks Consensus Estimate for six straight quarters now. Most recently, it reported fiscal fourth quarter earnings per share of $1.82, which beat expectations by 10.3%. Revenues of $1.29 billion improved 6% year over year.

Furthermore, orders increased 21% to $1.49 billion. Revenues at CSG rose 2% year over year to $919 million due to strength in 5G and aerospace, defense and government end-markets. EISG revenues jumped 18% to $375 million thanks to demand for semiconductor measurement solutions and next-generation automotive and energy technologies.

The company attributed the momentum to its software-centric solutions strategy that allows it to capitalize on long-term secular growth trends in its markets. KEYS expects to continue delivering above-market growth moving forward.

Analysts obviously agree as they have raised earnings estimates over the past 60 days. The Zacks Consensus Estimate for this year (ending October 2022) are up 3.1% to $6.91, while the advance for next year (ending September 2023) is 4.3% to $7.54. The expected year-over-year improvement is more than 9% at the moment.

KEYS is in a good position to continue capitalizing on the investment in next generation process technologies by semiconductor companies. The acceleration of 5G deployments and the defense technology modernization are also avenues for growth moving throughout 2022 and beyond.

For its fiscal first quarter, KEYS expects revenues of $1.225 billion to $1.245 billion with non-GAAP earnings between $1.50 and $1.56.