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Will Revenue Decline Impede Keysight (KEYS) Q2 Earnings?
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Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to report second-quarter fiscal 2024 results on May 20 after the closing bell. It pulled off a trailing four-quarter earnings surprise of 6.39%, on average.
Based in Santa Rosa, CA, the electronic design company is expected to have recorded a top-line decline year over year, owing to demand softness in various end markets. However, portfolio expansion through cutting-edge innovations catering to emerging markets, such as electric vehicles, AI data centers and advanced wireless communications, is a positive factor.
Factors at Play
In the quarter, Keysight has introduced the AI Data Center Test platform to accelerate AI/ML network design by emulating high-scale AI workloads accurately, delivering in-depth insights into collective communication performance. Such innovation is likely to have had a positive impact on second-quarter performance.
In the quarter under review, Keysight joined forces with NVIDIA to accelerate 6G research efforts through the NVIDIA 6G Research Cloud Platform. It has also collaborated with Advanced Micro Devices, Inc. to develop a realistic performance benchmarking methodology for Cloud and Edge Infrastructure across various industry use cases.
Intel utilized Keysight’s Open RAN Architect portfolio to develop and validate massive multiple-input, multiple-output (mMIMO) beamforming designs for Open Radio Access Networks. Such developments are likely to have had a positive impact on the quarterly earnings.
During the quarter, Autotalks, a prominent auto chip manufacturer, deployed Keysight's advanced testing solutions to validate their TEKTON3 V2X (Vehicle-to-Everything) system-on-a-chip in compliance with the physical layer specifications of the 3GPP 5G New Radio (NR) Release-16 Sidelink standards. Deutsche Telekom has also selected the Keysight NTN (Non-Terrestrial Network) testing solutions suite for the Satellite NB-IoT Early Adopter Program. These developments are likely to have supported the top line during the quarter.
However, the company is witnessing weakness in multiple verticals. The cautious spending environment continues to weigh on the consumer electronics market. Despite improved industry outlook in the semiconductor market, several foundry customers continue to postpone large projects. These factors will likely affect net sales in the Electronic Industrial Solutions Group (EISG). Our estimate for the EISG segment is pegged at $405.2 million, indicating a 10.6% year-over-year decline.
Inventory corrections continue to plague demand in the commercial communications market. Our estimate for the Communications Solutions Group segment is pegged at $795.6 million, implying a decline from $937 million reported in the year-ago quarter.
Demand in the Asia-Pacific region remains weak. The trade spat between China and the United States is likely to remain an overhang on the company’s performance.
Key Developments
During the quarter, Keysight announced its intention to acquire Spirent Communications for a cash transaction of $1.5 billion. KEYS sees that Spirent’s differentiated portfolio is aligned with its long-term software-centric solutions strategy.
Overall Expectations
For the April quarter, the Zacks Consensus Estimate for total revenues is pegged at $1.20 billion, which indicates a decline of 13.55% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share stands at $1.38, suggesting a decrease from the prior year’s figure of $2.12.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Keysight in the fiscal second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.38. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are a few other companies you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season:
Image: Bigstock
Will Revenue Decline Impede Keysight (KEYS) Q2 Earnings?
Keysight Technologies, Inc. (KEYS - Free Report) is scheduled to report second-quarter fiscal 2024 results on May 20 after the closing bell. It pulled off a trailing four-quarter earnings surprise of 6.39%, on average.
Based in Santa Rosa, CA, the electronic design company is expected to have recorded a top-line decline year over year, owing to demand softness in various end markets. However, portfolio expansion through cutting-edge innovations catering to emerging markets, such as electric vehicles, AI data centers and advanced wireless communications, is a positive factor.
Factors at Play
In the quarter, Keysight has introduced the AI Data Center Test platform to accelerate AI/ML network design by emulating high-scale AI workloads accurately, delivering in-depth insights into collective communication performance. Such innovation is likely to have had a positive impact on second-quarter performance.
In the quarter under review, Keysight joined forces with NVIDIA to accelerate 6G research efforts through the NVIDIA 6G Research Cloud Platform. It has also collaborated with Advanced Micro Devices, Inc. to develop a realistic performance benchmarking methodology for Cloud and Edge Infrastructure across various industry use cases.
Intel utilized Keysight’s Open RAN Architect portfolio to develop and validate massive multiple-input, multiple-output (mMIMO) beamforming designs for Open Radio Access Networks. Such developments are likely to have had a positive impact on the quarterly earnings.
During the quarter, Autotalks, a prominent auto chip manufacturer, deployed Keysight's advanced testing solutions to validate their TEKTON3 V2X (Vehicle-to-Everything) system-on-a-chip in compliance with the physical layer specifications of the 3GPP 5G New Radio (NR) Release-16 Sidelink standards. Deutsche Telekom has also selected the Keysight NTN (Non-Terrestrial Network) testing solutions suite for the Satellite NB-IoT Early Adopter Program. These developments are likely to have supported the top line during the quarter.
However, the company is witnessing weakness in multiple verticals. The cautious spending environment continues to weigh on the consumer electronics market. Despite improved industry outlook in the semiconductor market, several foundry customers continue to postpone large projects. These factors will likely affect net sales in the Electronic Industrial Solutions Group (EISG). Our estimate for the EISG segment is pegged at $405.2 million, indicating a 10.6% year-over-year decline.
Inventory corrections continue to plague demand in the commercial communications market. Our estimate for the Communications Solutions Group segment is pegged at $795.6 million, implying a decline from $937 million reported in the year-ago quarter.
Demand in the Asia-Pacific region remains weak. The trade spat between China and the United States is likely to remain an overhang on the company’s performance.
Key Developments
During the quarter, Keysight announced its intention to acquire Spirent Communications for a cash transaction of $1.5 billion. KEYS sees that Spirent’s differentiated portfolio is aligned with its long-term software-centric solutions strategy.
Overall Expectations
For the April quarter, the Zacks Consensus Estimate for total revenues is pegged at $1.20 billion, which indicates a decline of 13.55% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share stands at $1.38, suggesting a decrease from the prior year’s figure of $2.12.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Keysight in the fiscal second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.38. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Keysight Technologies Inc. Price and EPS Surprise
Keysight Technologies Inc. price-eps-surprise | Keysight Technologies Inc. Quote
Zacks Rank: Keysight has a Zacks Rank #3.
Stocks to Consider
Here are a few other companies you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season:
NVIDIA Corporation (NVDA - Free Report) is set to release quarterly numbers on May 22. It has an Earnings ESP of +2.38% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Walmart Inc. (WMT - Free Report) is set to release quarterly numbers on May 16. It has an Earnings ESP of +2.45% and a Zacks Rank #3.
Nice (NICE - Free Report) has an Earnings ESP of +0.18% and carries a Zacks Rank of 3. The company is set to report quarterly numbers on May 16.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.