A month has gone by since the last earnings report for Agilent Technologies (A Quick QuoteA - Free Report) . Shares have added about 12.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Agilent due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Agilent Q4 Earnings Beat Estimates

Agilent Technologies delivered fourth-quarter fiscal 2023 earnings of $1.38 per share, which beat the Zacks Consensus Estimate by 2.99%. The bottom line decreased by 10% from the year-ago fiscal quarter’s level.

Revenues of $1.69 billion surpassed the Zacks Consensus Estimate of $1.67 billion. However, the top line was down 8.7% on a reported basis and 9.7% on a core basis from the respective year-ago fiscal quarter’s levels.

The decline was attributed to broad-based weakness across all the end markets, especially in Chemistry & Advanced Materials, Pharma, Food and Diagnostics and Clinical markets.

Also, weak momentum in China was a major concern. The company witnessed a year-over-year decline of 31% in its business in China in the reported quarter.

Segmental Top-Line Details

Agilent has three reporting segments, namely, Life Sciences & Applied Markets Group (“LSAG”), Agilent Cross Lab Group (“ACG”) and Diagnostics and Genomics Group (“DGG”).

LSAG: The segment accounted for $928 million or 55% of its total revenues, down 17% on a reported basis and 18% on a core basis from the respective prior-year fiscal quarter’s levels. This was due to macroeconomic uncertainties, soft market conditions in China and sluggish capital spending by the customers. The reported figure came ahead of the Zacks Consensus Estimate of $925 million.

ACG: Revenues from the segment were $404 million, accounting for 24% of total revenues. The figure surpassed the consensus mark of $401 million. The top line improved by 6% from the prior-year fiscal quarter’s reading on a reported basis and by 4% on a core basis, demonstrating solid momentum across all end markets and regions except China.

DGG: Revenues increased 1% from the prior-year fiscal quarter’s figure on a reported basis to $356 million, accounting for the remaining 21% of total revenues. The figure remained flat year over year on a core basis. The figure came above the consensus mark of $345 million. Segmental growth was attributed to strength in the NASD business.

However, weakness in the genomics business was a negative.

Operating Results

For the fiscal fourth quarter, gross margin in the LSAG segment contracted by 100 basis points (bps) to 59.6% from the prior-year fiscal quarter’s number. ACG’s gross margin expanded by 180 bps to 50.4%. DGG’s gross margin expanded by 90 bps from the year-ago fiscal quarter’s actuals to 51.9%.

Research & development (“R&D”) costs were $114 million, down 4.2% from the prior-year fiscal quarter’s number. Selling, general & administrative (“SG&A”) expenses were $393 million, down 6.9% from the year-earlier fiscal quarter’s figure. As a percentage of revenues, R&D expenses expanded by 40 bps year over year to 6.8%. SG&A expenses expanded by 50 bps year over year to 23.3%.

Operating margin for the fiscal fourth quarter was 24.2%, which declined 130 bps from the year-earlier fiscal quarter’s figure.

Segment-wise, the operating margin in the LSAG segment contracted by 460 bps to 28.1% from the prior-year fiscal quarter’s number. ACG’s gross margin expanded by 430 bps to 31.7%. DGG’s gross margin expanded by 300 bps from the year-ago fiscal quarter’s actuals to 22.5%.

Balance Sheet & Cash Flow

As of Oct 31, 2023, Agilent’s cash and cash equivalents were $1.59 billion, up from $1.33 billion on Jul 31, 2023.

Accounts receivables were $1.29 billion at the end of fourth-quarter fiscal 2023, down from $1.33 billion at the end of third-quarter fiscal 2023.

Long-term debt was $2.735 billion for the reported quarter compared with $2.734 billion in the prior fiscal quarter.

Agilent generated $516 million in cash from operations during the reported quarter, down from $562 million generated in the previous quarter.

The company made dividend payments worth $66 million and repurchased shares worth $80 million during the fiscal fourth quarter.

Guidance

For the fiscal first quarter of 2024, management expects revenues of $1.555-$1.605 billion, suggesting a decline between 11.4% and 8.6% on a reported basis from the year-ago fiscal quarter’s actuals.

Non-GAAP earnings per share are expected to be $1.20-$1.23.

For fiscal 2024, management expects revenues in the band of $6.71-$6.81 billion, implying a fall of 1.8-0.3% on a reported basis from the respective fiscal 2023 figures.

Fiscal 2024 non-GAAP earnings per share are projected in the range of $5.44-$5.55.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -8.58% due to these changes.

VGM Scores

Currently, Agilent has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Agilent has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.