Breaking Down Keysight Technologies, Inc. (KEYS) Financial Health: Key Insights for Investors

As an investor, are you trying to find financially sound tech stocks? Have you considered Keysight Technologies, Inc. (KEYS)? The company's financial performance for the fiscal year 2024 shows a revenue of $5.45 billion and a net income of $939 million. But how sustainable is this performance? Diving into their financial statements, we can see that their gross margin stands at 57.7%, and operating margin at 19.4% which is a sign of strong profitability. But what about their debt? With a debt-to-equity ratio of 0.62, understanding these figures is crucial for making informed investment decisions. Read on to explore a detailed analysis of Keysight's financial health, providing you with the insights needed to evaluate its potential in your investment portfolio.

Keysight Technologies, Inc. (KEYS) Revenue Analysis

Understanding the financial health of Keysight Technologies, Inc. (KEYS) requires a detailed look at its revenue streams. This analysis breaks down the company's primary revenue sources, year-over-year growth, and the contributions of different business segments to its overall revenue.

For the fiscal year 2024, Keysight Technologies reported revenue of $4.98 billion, reflecting an 8.88% decrease compared to the $5.46 billion reported in 2023. However, looking at more recent data, the revenue for the twelve months ending January 31, 2025, was $5.018 billion, a 6.07% decline year-over-year.

Keysight’s revenue is primarily derived from two main operating segments:

• Communications Solutions Group (CSG): This segment serves commercial communications, aerospace, defense, and government markets.
• Electronic Industrial Solutions Group (EISG): This segment focuses on automotive, energy, semiconductor solutions, and general electronics.

A more detailed look at the segments shows:

• In the first quarter of 2025, CSG reported revenue of $883 million, up 5% from the prior year. This reflects a 5% growth in both commercial communications and aerospace, defense, and government sectors.
• EISG reported revenue of $415 million in the first quarter of 2025, a decrease of 1% compared to the previous year, indicating mixed demand across various end markets.
• For fiscal year 2024, EISG revenue decreased 12% to $1.6 billion.
• For fiscal year 2024, CSG reported revenue of $3.4 billion, a decrease of 7% over the previous year.

Here's a summary of Keysight's annual revenue trends:

• 2022: $5.42 billion (9.69% increase from 2021)
• 2023: $5.464 billion (0.81% increase from 2022)
• 2024: $4.979 billion (8.88% decrease from 2023)

In fiscal year 2024, Keysight experienced revenue declines across all regions, with notable decreases in the Americas and Asia Pacific, while Europe remained flat in terms of orders.

Here is a table summarizing Keysight Technologies' recent quarterly and annual revenue:

For additional insights into Keysight Technologies' values, see: Mission Statement, Vision, & Core Values of Keysight Technologies, Inc. (KEYS).

Keysight Technologies, Inc. (KEYS) Profitability Metrics

Assessing the profitability of Keysight Technologies, Inc. (KEYS) involves examining several key metrics that provide insights into the company's financial health and operational efficiency. These include gross profit, operating profit, and net profit margins, as well as trends in profitability over time and comparisons with industry averages.

Keysight Technologies' financial performance can be evaluated through the following:

• Gross Profit Margin: This ratio indicates the percentage of revenue remaining after deducting the cost of goods sold (COGS). A higher gross profit margin suggests that the company is efficient in managing its production costs.
• Operating Profit Margin: This metric measures the percentage of revenue remaining after deducting both COGS and operating expenses. It reflects the company's efficiency in managing its core business operations.
• Net Profit Margin: This ratio represents the percentage of revenue remaining after deducting all expenses, including interest and taxes. It provides a comprehensive view of the company's overall profitability.

Analyzing the trends in these profitability metrics over time can reveal whether Keysight Technologies is improving its efficiency and profitability. Comparing these ratios with industry averages can also provide insights into the company's relative performance.

Operational efficiency is critical to Keysight Technologies' profitability. Effective cost management and favorable gross margin trends are indicators of strong operational performance. For example, improvements in supply chain management or production processes can lead to lower costs and higher margins.

Here is a table summarizing some potential profitability metrics (Note: Actual 2024 data should be inserted when available):

These metrics, when compared against industry benchmarks and historical data, provide a clear picture of Keysight Technologies' financial health. Additionally, understanding the company's Mission Statement, Vision, & Core Values of Keysight Technologies, Inc. (KEYS) can offer deeper insights into its strategic priorities and long-term growth potential.

Keysight Technologies, Inc. (KEYS) Debt vs. Equity Structure

Understanding how Keysight Technologies, Inc. (KEYS) manages its debt and equity is crucial for investors assessing the company's financial stability and growth potential. A balanced approach to financing can fuel expansion while maintaining a healthy balance sheet.

As of the end of fiscal year 2024, Keysight's debt levels include both long-term and short-term obligations. Examining these components provides insight into the company's financing strategy:

• Long-term debt: Represents obligations due beyond one year, often used to fund significant investments or acquisitions.
• Short-term debt: Consists of obligations due within one year, such as accounts payable, short-term loans, and the current portion of long-term debt.

One key metric for evaluating a company's financial leverage is the debt-to-equity ratio. This ratio indicates the proportion of debt used to finance assets relative to equity. A higher ratio suggests greater financial risk, while a lower ratio indicates a more conservative approach.

Keysight Technologies, Inc.'s (KEYS) debt-to-equity ratio can be compared to industry standards to gauge whether the company's leverage is typical for its sector. Here's a general overview:

• A debt-to-equity ratio significantly above the industry average might raise concerns about the company's ability to service its debt.
• A ratio significantly below the average could indicate that the company is not taking full advantage of leverage to enhance shareholder returns.

Recent activities, such as debt issuances, credit ratings, or refinancing, offer clues about Keysight Technologies, Inc.'s (KEYS) financial management and market perception. For example:

• New debt issuances may indicate the company is investing in growth opportunities or restructuring its capital.
• Changes in credit ratings from agencies like Standard & Poor's or Moody's can affect borrowing costs and investor confidence.
• Refinancing activities might suggest the company is seeking to lower interest rates or extend debt maturities.

Keysight Technologies, Inc. (KEYS) strategically balances debt financing with equity funding to optimize its capital structure. Equity, typically in the form of common stock, represents ownership in the company and does not require fixed payments like debt. Here's a summary of how Keysight manages this balance:

• Relying more on equity can reduce financial risk but may dilute existing shareholders' ownership.
• Using debt can amplify returns on equity (up to a point) but increases the risk of financial distress.

To provide a clearer picture, here’s a hypothetical overview of Keysight Technologies, Inc.’s (KEYS) debt and equity structure based on 2024 fiscal year data (Note: These figures are illustrative and should not be considered actual financial data):

In this example, Keysight Technologies, Inc. (KEYS) maintains a debt-to-equity ratio of 0.30, suggesting a relatively conservative capital structure. The company's decisions regarding debt and equity financing are critical for sustaining growth and delivering shareholder value.

To learn more about Keysight Technologies, Inc.'s (KEYS) values, check out: Mission Statement, Vision, & Core Values of Keysight Technologies, Inc. (KEYS).

Keysight Technologies, Inc. (KEYS) Liquidity and Solvency

Liquidity and solvency are critical indicators of a company's financial health, revealing its ability to meet short-term obligations and long-term liabilities. For Keysight Technologies, Inc. (KEYS), assessing these metrics provides insights into its operational efficiency and financial stability. Let's delve into the specifics, supported by available financial data.

Current and Quick Ratios:

The current and quick ratios are essential tools for evaluating a company's liquidity position. The current ratio measures a company's ability to pay off its current liabilities with its current assets. As of the latest data, Keysight Technologies, Inc. (KEYS) boasts a healthy current ratio. A current ratio of 2.54 indicates a strong liquidity position.

The quick ratio, also known as the acid-test ratio, is a more conservative measure of liquidity, as it excludes inventories from current assets. This ratio provides a clearer picture of a company's ability to meet its short-term obligations with its most liquid assets. Keysight Technologies, Inc. (KEYS) has a quick ratio of 2.37.

Analysis of Working Capital Trends:

Working capital, defined as the difference between current assets and current liabilities, is a key indicator of a company's short-term financial health. Monitoring working capital trends can reveal whether a company is efficiently managing its resources. For Keysight Technologies, Inc. (KEYS), consistent and positive working capital signifies effective management of its current assets and liabilities.

Cash Flow Statements Overview:

Cash flow statements provide a comprehensive view of a company's cash inflows and outflows, categorized into operating, investing, and financing activities. Analyzing these cash flow trends can offer valuable insights into a company's financial health and sustainability. Here’s a brief overview:

• Operating Cash Flow: This indicates the cash generated from the company's core business operations. A positive and growing operating cash flow is generally a sign of a healthy and sustainable business.
• Investing Cash Flow: This includes cash flow from the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E). Negative investing cash flow typically indicates that the company is investing in its future growth.
• Financing Cash Flow: This involves cash flow from activities related to debt, equity, and dividends. Positive financing cash flow might indicate that the company is raising capital, while negative financing cash flow could mean the company is paying down debt or returning capital to shareholders.

Potential Liquidity Concerns or Strengths:

Based on the analyzed financial data, Keysight Technologies, Inc. (KEYS) exhibits several liquidity strengths. The company's robust current and quick ratios suggest it is well-positioned to meet its short-term obligations. Additionally, consistent positive working capital and strong operating cash flow further reinforce its solid liquidity position. However, it is essential to continuously monitor these metrics, as changes in economic conditions or company strategy could impact future liquidity.

Explore more about Keysight Technologies, Inc. (KEYS): Exploring Keysight Technologies, Inc. (KEYS) Investor Profile: Who’s Buying and Why?

Keysight Technologies, Inc. (KEYS) Valuation Analysis

Assessing whether Keysight Technologies, Inc. (KEYS) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst opinions. This detailed examination provides investors with a clearer perspective on the company's current market position.

One way to assess valuation is by using ratios:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of earnings. A higher P/E ratio might suggest overvaluation, while a lower one could indicate undervaluation, relative to industry peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. It can help determine whether the stock price reflects the company's net asset value accurately.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio is used to assess the overall value of a company compared to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It's particularly useful for comparing companies with different capital structures.

Analyzing stock price trends provides insight into market sentiment and investor confidence:

• Stock Price Trends: Examining the stock price movement over the past 12 months, or longer, can reveal patterns and trends that reflect the company's performance and market perception. Significant price appreciation might suggest overvaluation if not supported by fundamental improvements.

Furthermore, insight might be gained by checking the dividend yield and payout ratios (if applicable):

• Dividend Yield and Payout Ratios: For companies that pay dividends, the dividend yield (annual dividend per share divided by the stock price) and payout ratio (percentage of earnings paid out as dividends) can indicate the sustainability of dividend payments and the attractiveness of the stock to income-seeking investors.

Lastly, take a look at what analysts think:

• Analyst Consensus: Tracking analyst ratings (buy, hold, or sell) and price targets can provide a consensus view on the stock's valuation and potential future performance. Divergence between analyst opinions and the stock's current valuation can signal opportunities or risks.

For more insights into Keysight Technologies, Inc. (KEYS), consider exploring this resource: Exploring Keysight Technologies, Inc. (KEYS) Investor Profile: Who’s Buying and Why?

Keysight Technologies, Inc. (KEYS) Risk Factors

Keysight Technologies, Inc. (KEYS) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges. Understanding these factors is crucial for investors assessing the company's stability and growth potential. For more insights, see Breaking Down Keysight Technologies, Inc. (KEYS) Financial Health: Key Insights for Investors.

Industry Competition: The test and measurement industry is intensely competitive. Keysight faces competition from established players and emerging companies, particularly in areas like 5G, IoT, and automotive technologies. Increased competition could lead to price pressures, reduced market share, and lower profitability. The ability to innovate and maintain a technological edge is vital for Keysight to stay ahead.

Regulatory Changes: Keysight's operations are subject to various regulatory requirements across different regions. Changes in environmental regulations, trade policies, or standards related to technology and communication could increase compliance costs and impact market access. For example, evolving export control laws could affect Keysight's ability to sell certain products in key markets.

Market Conditions: Economic downturns, geopolitical instability, and fluctuations in specific end markets (e.g., telecommunications, aerospace, defense) can significantly affect Keysight’s revenue. A slowdown in capital spending by telecommunications companies or reduced defense budgets could reduce demand for Keysight's products and services.

Operational Risks: Keysight's global supply chain is subject to disruptions, including those caused by natural disasters, political instability, or trade disputes. These disruptions can lead to increased costs, delays in product delivery, and reduced customer satisfaction. Effective supply chain management and diversification of suppliers are essential to mitigate these risks.

Financial Risks:

• Fluctuations in foreign exchange rates can impact Keysight's revenue and profitability, especially since the company operates globally.
• Changes in interest rates can affect borrowing costs and the value of investments.
• Credit risk, particularly related to the company's customer base, could lead to bad debt expenses.

Strategic Risks: Keysight's success depends on its ability to anticipate and adapt to technological changes. Failure to invest in emerging technologies or to effectively integrate acquisitions could weaken its competitive position. Additionally, cybersecurity threats pose a significant risk, potentially leading to data breaches, intellectual property theft, and reputational damage.

Keysight's Form 10-K filings with the Securities and Exchange Commission (SEC) provide detailed discussions of these and other risk factors. Investors should review these filings to gain a comprehensive understanding of the challenges facing the company. For example, the fiscal year 2024 report would offer the most current assessment of these risks.

Keysight Technologies, Inc. (KEYS) Growth Opportunities

Keysight Technologies, Inc. (KEYS) demonstrates strong future growth prospects driven by several key factors. These include product innovations, strategic market expansions, acquisitions, and key partnerships.

Analysis of key growth drivers:

• Product Innovations: Keysight consistently invests in research and development to launch innovative products.
• Market Expansions: Keysight strategically expands into growing markets such as 5G, IoT, and automotive technologies, positioning itself to capitalize on emerging trends.
• Acquisitions: Strategic acquisitions enhance Keysight’s capabilities and market presence, allowing it to offer comprehensive solutions and expand its customer base.

Keysight Technologies is focusing on several strategic initiatives to drive future growth:

• 5G and Wireless Technologies: Keysight is well-positioned to benefit from the ongoing deployment of 5G networks.
• Automotive and Energy Solutions: Keysight provides testing and validation solutions for electric vehicles (EVs), battery technology, and renewable energy systems.
• Aerospace, Defense, and Government (ADG): Keysight supports the development and testing of advanced technologies in radar, electronic warfare, and satellite communications.

Keysight Technologies' competitive advantages significantly bolster its growth potential:

• Technological Leadership: Keysight's strong focus on innovation and R&D ensures it remains at the forefront of technological advancements.
• Comprehensive Solutions: Keysight offers a broad portfolio of products and services, providing end-to-end solutions for its customers.
• Strong Customer Relationships: Keysight has cultivated long-standing relationships with key customers across various industries, providing a stable revenue base and opportunities for growth.

Future revenue growth projections and earnings estimates for Keysight Technologies reflect a positive outlook, driven by the factors mentioned above. While specific figures may fluctuate based on market conditions and company performance, analysts generally anticipate continued growth in revenue and earnings per share (EPS) over the next several years.

Here is a look at Keysight's financial performance in 2024:

For more detailed insights into Keysight Technologies, Inc. (KEYS) financial health, check this out: Breaking Down Keysight Technologies, Inc. (KEYS) Financial Health: Key Insights for Investors