Agilent Technologies (A) stock climbed 6.5 % this afternoon. According to our metrics, the company seems fairly valued at today's prices. In the below analysis, we will put Agilent Technologies's valuation in the context of its profitability and market sentiment, which are also strong drivers for share price.
Agilent Technologies, Inc. provides application focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. The large-cap Healthcare company is based in Santa Clara, United States.
A Has a Higher P/E Ratio Than the Sector Average
Compared to the Healthcare sector's average of 13.21, Agilent Technologies has a trailing twelve month price to earnings (P/E) ratio of 35.3 based on its trailing 12 month of $4.38. Since Agilent Technologies's P/E ratio is higher than its sector average of 13.21, the market is potentially overvaluing the company's earnings.
A Has an Alarming P/B Ratio
Since Agilent Technologies's P/B ratio of 8.6 is higher than its sector average of 4.07. Since the total value of its outstanding equity shares is worth more than 8 times the company's assets, investors should not accept this stock to offer a significant margin of safety.
Investors Stand to Gain from A's Cash Flows
Agilent Technologies has strong cash flows. With a coefficient of variability of 22.1% and an average growth rate of 11.0%, the company is predictably turning its revenue into cash:
| Date Reported | Cash Flow from Operations ($) | Capital expenditures ($) | Free Cash Flow ($) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-10-31 | 1,312,000,000.0 | -291,000,000.0 | 1,021,000,000.0 | -21.28 |
| 2021-10-31 | 1,485,000,000.0 | -188,000,000.0 | 1,297,000,000.0 | 61.72 |
| 2020-10-31 | 921,000,000.0 | -119,000,000.0 | 802,000,000.0 | -7.39 |
| 2019-10-31 | 1,021,000,000.0 | -155,000,000.0 | 866,000,000.0 | n/a |
Agilent Technologies's Margins Are Strong
| Date Reported | Revenue ($) | Cost of Revenue ($) | Gross Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-10-31 | 6,848,000,000.0 | 3,126,000,000.0 | 54.35 | 0.8 |
| 2021-10-31 | 6,319,000,000.0 | 2,912,000,000.0 | 53.92 | 1.47 |
| 2020-10-31 | 5,339,000,000.0 | 2,502,000,000.0 | 53.14 | -2.19 |
| 2019-10-31 | 5,163,000,000.0 | 2,358,000,000.0 | 54.33 | n/a |
| Date Reported | Total Revenue ($) | Operating Expenses ($) | Operating Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-10-31 | 6,848,000,000.0 | 5,230,000,000.0 | 23.63 | 6.35 |
| 2021-10-31 | 6,319,000,000.0 | 4,915,000,000.0 | 22.22 | 13.54 |
| 2020-10-31 | 5,339,000,000.0 | 4,294,000,000.0 | 19.57 | -3.12 |
| 2019-10-31 | 5,163,000,000.0 | 4,120,000,000.0 | 20.2 | n/a |
Agilent Technologies's cost of revenue is growing at a rate of 15.5% in contrast to 8.4% for operating expenses. Sales revenues, on the other hand, have experienced a 10.0% growth rate. As a result, the average gross margins growth is 0.0 and the average operating margins growth rate is 5.6%, with coefficients of variability of 1.0% and 8.7% respectively.
Agilent Technologies Benefits From Positive Market Signals
The market sentiment regarding Agilent Technologies is overwhelmingly positive. The stock has an average rating of buy and target prices ranging from $165 to $135. A is trading only 2.32% away from its target price of $151.06 which does, however, imply limited upside potential. 1.0% of the company's shares are tied to short positions, and 90.3% of the shares are held by institutional investors.
In conclusion, we see that Agilent Technologies shares are fairly valued with mostly positive market sentiment.
