Keysight Technologies, Inc. (NYSE: KEYS)

Sector: Technology Industry: Scientific & Technical Instruments CIK: 0001601046
Market Cap 34.91 Bn
P/B 5.94
P/E 41.07
P/S 6.49
ROIC (Qtr) 7.88
Div Yield % 0.00
Rev 1y % (Qtr) 10.26
Total Debt (Qtr) 2.78 Bn
Debt/Equity (Qtr) 0.47

About

Keysight Technologies, Inc., often recognized by its stock symbol KEYS, is a prominent player in the computing, communications, and electronics industry. The company has a rich history of over 80 years, contributing significantly to measurement science. Keysight's primary business activities involve the provision of design and test solutions, helping customers overcome development and commercialization challenges. The company's operations span across various industries and regions. Keysight generates revenue through the sale of hardware, software,...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.41B provides robust 0.51x coverage of total debt 2.78B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.87B provide 36.73x coverage of short-term debt 51M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.41B provides exceptional 14.68x coverage of interest expenses 96M, showing strong debt service capability.
  • Robust free cash flow of 1.28B exceeds capital expenditure of 128M by 10.01x, indicating strong organic growth funding capability.
  • Tangible assets of 6.57B provide exceptional 7.44x coverage of deferred revenue 884M, showing strong service capability backing.

Bear case

  • Operating cash flow of 1.41B barely covers its investment activities of (1.73B), with a coverage ratio of -0.82, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.73B) provide weak support for R&D spending of 1.01B, which is -1.71x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.87B provide limited coverage of acquisition spending of (1.62B), which is -1.15x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.41B barely covers operating expenses of (20M) with a -70.45 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Retained earnings of 7.08B provide limited buffer against comprehensive income items of (248M), which is -28.53x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Scientific & Technical Instruments
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 GRMN Garmin Ltd 38.77 Bn 24.68 5.58 0.16 Bn
2 KEYS Keysight Technologies, Inc. 34.91 Bn 41.07 6.49 2.78 Bn
3 COHR Coherent Corp. 28.91 Bn 244.51 4.78 3.51 Bn
4 TDY Teledyne Technologies Inc 23.87 Bn 29.19 3.98 2.53 Bn
5 TRMB Trimble Inc. 19.54 Bn 54.65 5.43 1.39 Bn
6 FTV Fortive Corp 18.68 Bn 31.02 3.31 3.31 Bn
7 MKSI Mks Inc 10.78 Bn 38.63 2.81 4.55 Bn
8 CGNX Cognex Corp 6.14 Bn 55.76 6.32 0.08 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 3.10 2.20
EV to Cash from Ops. EV/CFO 24.87 9.84
EV to Debt EV to Debt 12.61 22.70
EV to EBIT EV/EBIT 30.23 15.74
EV to EBITDA EV/EBITDA 30.41 11.58
EV to Free Cash Flow [EV/FCF] EV/FCF 27.35 24.79
EV to Market Cap EV to Market Cap 1.00 -2.78
EV to Revenue EV/Rev 6.52 6.45
Price to Book Value [P/B] P/B 5.94 7.12
Price to Earnings [P/E] P/E 41.07 13.89
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -16.40
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -7.19
Dividend per Basic Share Div per Share (Qtr) 0.00 0.31
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.83
Interest Coverage Int. cover (Qtr) 12.07 -13.61
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 16.88 -21.70
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 4.29 101.63
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 37.58 19.84
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 4.44 17.31
EBIT Growth (1y) % EBIT 1y % (Qtr) 22.13 20.90
EBT Growth (1y) % EBT 1y % (Qtr) 22.89 82.68
EPS Growth (1y) % EPS 1y % (Qtr) 39.66 65.55
FCF Growth (1y) % FCF 1y % (Qtr) 42.65 32.88
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.51 34.27
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.48 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.05
Cash Ratio Cash Ratio (Qtr) 1.01 2.99
Current Ratio Curr Ratio (Qtr) 2.35 4.83
Debt to Equity Ratio Debt/Equity (Qtr) 0.47 0.67
Interest Cover Ratio Int Coverage (Qtr) 12.07 -13.61
Times Interest Earned Times Interest Earned (Qtr) 12.07 -13.61
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 26.70 -296.15
EBIT Margin % EBIT Margin % (Qtr) 21.56 -316.09
EBT Margin % EBT Margin % (Qtr) 19.78 -351.37
Gross Margin % Gross Margin % (Qtr) 62.10 40.05
Net Profit Margin % Net Margin % (Qtr) 15.80 -354.10