It hasn't been a great evening session for Agilent Technologies investors, who have watched their shares sink by -1.7% to a price of $130.8. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Agilent Technologies's Valuation Is in Line With Its Sector Averages:
Agilent Technologies, Inc. provides application focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 25.4 and an average price to book (P/B) ratio of 3.23. In contrast, Agilent Technologies has a trailing 12 month P/E ratio of 31.0 and a P/B ratio of 6.14.
Agilent Technologies's PEG ratio is 5.2, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Growing Revenues and Healthy Leverage Levels:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,914 | $5,163 | $5,339 | $6,319 | $6,848 | $6,833 |
| Operating Margins | 18% | 18% | 16% | 21% | 24% | 20% |
| Net Margins | 6% | 21% | 13% | 19% | 18% | 18% |
| Net Income (M) | $316 | $1,071 | $719 | $1,210 | $1,254 | $1,240 |
| Net Interest Expense (M) | $75 | $74 | $78 | $81 | $84 | $95 |
| Depreciation & Amort. (M) | $210 | $238 | $308 | $321 | $317 | $271 |
| Diluted Shares (M) | 325 | 318 | 312 | 307 | 300 | 296 |
| Earnings Per Share | $0.97 | $3.37 | $2.3 | $3.94 | $4.18 | $4.19 |
| EPS Growth | n/a | 247.42% | -31.75% | 71.3% | 6.09% | 0.24% |
| Avg. Price | $64.69 | $73.1 | $90.72 | $142.77 | $128.75 | $130.85 |
| P/E Ratio | 66.01 | 21.44 | 38.94 | 35.87 | 30.73 | 31.01 |
| Free Cash Flow (M) | $910 | $866 | $802 | $1,297 | $1,021 | $1,474 |
| CAPEX (M) | $177 | $155 | $119 | $188 | $291 | $298 |
| EV / EBITDA | 18.09 | 20.1 | 24.92 | 26.6 | 20.59 | 24.36 |
| Total Debt (M) | $1,792 | $2,402 | $2,359 | $2,729 | $2,769 | $2,735 |
| Net Debt / EBITDA | -0.41 | 0.87 | 0.8 | 0.75 | 0.89 | 0.71 |
| Current Ratio | 3.33 | 1.53 | 2.33 | 2.22 | 2.03 | 2.61 |
Agilent Technologies has growing revenues and increasing reinvestment in the business, exceptional EPS growth, and generally positive cash flows. The company also benefits from an excellent current ratio of 2.61, decent operating margins with a stable trend, and healthy leverage levels.
