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Yahoo
21-05-2025
- Business
- Yahoo
Keysight's Q2 Earnings Beat Estimates, Top Line Surges Y/Y
Keysight Technologies Inc. KEYS reported solid second-quarter fiscal 2025 results, with both bottom and top lines beating the respective Zacks Consensus Estimate. Based in Santa Rosa, CA, the leading electronic design and testing solution provider reported higher year-over-year revenues, backed by strength in the AI data-center market, aerospace, defense and government end markets. Management's focus on expanding its business through collaborations with established sector players is another positive. Net income on a GAAP basis was $257 million or $1.49 per share compared with $126 million or 72 cents in the year-ago net income in the reported quarter was $295 million or $1.7 per share compared with $247 million or $1.41 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 6 cents. Keysight Technologies Inc. price-consensus-eps-surprise-chart | Keysight Technologies Inc. Quote Quarterly net sales improved to $1.31 billion from the year-ago quarter's $1.22 billion, exceeding the high end of the guidance. Total orders increased 8% year over year to $1.31 billion. The company is witnessing incrementally positive signals in its sales funnel and customer engagement. The top line beat the Zacks Consensus Estimate by $36 Solutions Group ('CSG') generated $913 million in revenues, up from the year-ago quarter's $840 million. The 9% year-over-year growth was primarily driven by healthy traction in the commercial communications end market, induced by strong demand for AI data-center network solutions and applications. Aerospace, defense and government end markets grew backed by healthy demand trends in Europe. The growing defense modernization initiative is a positive factor. The top line beat our estimate of $870.2 investment in 1.6 terabyte electrical and optical technologies, deployment of 400 and 800 gig ethernet technologies, investment in advanced 5G and 6G are driving demand. Wireless orders also grew during the Electronic Industrial Solutions Group ('EISG') segment's revenues increased to $393 million from $376 million in the prior-year quarter. Growing investment in advanced nodes and packaging, high-bandwidth memory and silicon photonics is induced by high AI-performance requirements driving growth in the semiconductor vertical. Demand also remains strong in the general electronics vertical. The growth, however, is partially offset by declining orders in the automotive vertical. The top line fell short of our revenue estimate of $409.2 Asia-Pacific revenues aggregated $573 million compared with $496 million in the prior-year quarter. The company reported a 4% year-over-year improvement in revenues from the Americas to $510 million. Revenues from Europe were $223 million, down 2% from the year-ago quarter's $227 million. During the quarter, the company's non-GAAP gross profit totaled $844 million compared with $790 million in the year-ago quarter, with gross margins of 64.6% and 65%, respectively. The non-GAAP operating margin was 25.2%, up from 24.2% in the prior-year reported a non-GAAP operating margin of 25.9%, down 60 basis points (bps) year over year. EISG reported a non-GAAP operating margin of 23.4%, up 430 bps year over year, largely due to a higher mix of software. In the first six months of fiscal 2025, Keysight generated $862 million in cash from operating activities compared with $438 million a year ago. As of April 30, 2025, the company had $3.11 billion in cash and cash equivalents and $2.53 billion of long-term debt. For the second quarter of fiscal 2025, Keysight expects revenues in the range of $1.3-$1.32 billion. Non-GAAP earnings are estimated to be between $1.63 and $1.69 per share. Keysight currently carries a Zacks Rank #3 (Hold). Juniper Networks, Inc. JNPR sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks the last reported quarter, it delivered an earnings surprise of 4.88%. Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. Juniper also introduced new features within the AI-driven enterprise portfolio that enable customers to simplify the rollout of their campus wired and wireless networks while bringing greater insight to network IDCC carries a Zacks Rank #2 (Buy) at present. In the trailing four quarters, InterDigital delivered an earnings surprise of 160.15%. It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings Networks, Inc. ANET, carrying a Zacks Rank of 2 at present, supplies products to a prestigious set of customers, including Fortune 500 global companies in markets such as cloud titans, enterprises, financials and specialty cloud service delivered a trailing four-quarter average earnings surprise of 11.82% and has a long-term growth expectation of 14.81%. Arista currently serves five verticals, namely cloud titans (customers that deploy more than one million servers), cloud specialty providers, service providers, financial services and the rest of the enterprise. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report InterDigital, Inc. (IDCC) : Free Stock Analysis Report Arista Networks, Inc. (ANET) : Free Stock Analysis Report Keysight Technologies Inc. (KEYS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
AVY Q1 Earnings Call: Tariff Uncertainty Clouds Steady Organic Growth and Margin Performance
Adhesive manufacturing company Avery Dennison (NYSE:AVY) met Wall Street's revenue expectations in Q1 CY2025, but sales were flat year on year at $2.15 billion. Its non-GAAP profit of $2.30 per share was in line with analysts' consensus estimates. Is now the time to buy AVY? Find out in our full research report (it's free). Revenue: $2.15 billion vs analyst estimates of $2.16 billion (flat year on year, in line) Adjusted EPS: $2.30 vs analyst estimates of $2.31 (in line) Adjusted EBITDA: $352.4 million vs analyst estimates of $353.4 million (16.4% margin, in line) Adjusted EPS guidance for Q2 CY2025 is $2.40 at the midpoint, below analyst estimates of $2.58 Operating Margin: 11.9%, in line with the same quarter last year Free Cash Flow was -$59.9 million, down from $64.1 million in the same quarter last year Organic Revenue rose 2.3% year on year, in line with the same quarter last year Market Capitalization: $13.46 billion Avery Dennison's first quarter performance was shaped by consistent demand in its core Materials and Solutions Groups, with management citing high-value product categories and sequential margin expansion as key drivers. CEO Deon Stander highlighted strong organic growth in high-value segments such as graphics, reflective solutions, and industrial tapes, as well as a rebound in North American label volumes after prior-year destocking. The Solutions Group benefited from continued momentum in retail shelf-edge solutions and food labeling, offsetting softness in certain apparel-related categories. Looking ahead, Avery Dennison's forward guidance reflects caution amid increased macroeconomic and trade-related uncertainty. Management pointed to evolving tariffs, particularly those affecting Chinese apparel exports, as a primary reason for restricting visibility to quarterly guidance. CFO Gregory Lovins explained that tariff impacts and potential shifts in global sourcing strategies could pressure apparel demand and margins, prompting the company to activate scenario planning and cost containment measures. Stander noted, 'It is more difficult to predict and forecast full-year results,' as the company balances investment in growth areas with proactive risk management. Avery Dennison's management attributed the quarter's steady results to targeted growth in high-value product lines, operational efficiency, and resilience in core markets. They also addressed evolving challenges in global trade policy and related impacts on customer demand, especially in apparel and logistics. High-value category momentum: Management highlighted strong organic growth in high-value categories, including graphics, reflective solutions, and industrial tapes, which now represent over a third of Materials Group sales. These segments saw high single-digit growth, offsetting weaker base business performance. Sequential recovery in North America: Label volume in North America improved from the prior year, aided by normalization of customer inventories and working capital. This helped stabilize Materials Group results despite softer demand in Europe and flat trends in China. Solutions Group project execution: The Solutions Group delivered top-line and margin expansion, driven by the successful rollout of shelf-edge solutions (VESCOM) at CVS Health and ongoing pilots with major grocery retailers like Kroger. Apparel-related growth was mixed: core apparel rose mid-single digits, but certain personalized and sports categories faced declines due to program timing. RFID and intelligent label outlook: Management emphasized continued progress in enterprise-wide intelligent labels, particularly in apparel and food, while logistics applications experienced expected declines. While new food pilots and compliance-driven retail programs are advancing, management does not anticipate another large-scale logistics rollout in 2025. Tariff and macroeconomic headwinds: Leadership acknowledged elevated uncertainty from recent tariff changes, particularly affecting apparel labels for garments exported from China to the U.S. While direct cost impacts are considered manageable, the indirect effect on discretionary demand is less predictable, leading to a more cautious approach for the remainder of the year. Avery Dennison's management expects near-term results to hinge on trade policy developments, apparel market demand, and the company's ability to grow high-value categories while managing costs. Tariff-driven apparel uncertainty: Management believes that ongoing U.S.-China tariff changes could continue to disrupt apparel label demand, with apparel sales expected to decline mid-single digits in the near term. The team is working with customers to facilitate supply chain shifts and is implementing pricing surcharges to offset direct input cost inflation. Expansion in high-value categories: The company sees growth potential in intelligent labels, food labeling, and shelf-edge solutions, especially as adoption expands in grocery and general retail. Management is investing in these areas to diversify revenue streams and reduce exposure to cyclical end markets. Proactive cost management: In response to macroeconomic uncertainty, management has activated scenario-based planning, including temporary cost controls and identification of structural actions if demand deteriorates. This approach is designed to protect margins and sustain free cash flow, even in a lower-volume environment. Ghansham Panjabi (Baird): Asked whether recent tariff announcements prompted pre-buying or order shifts in apparel. Management clarified that no significant pull-forward occurred, but early Q2 apparel demand is trending lower as brands re-evaluate sourcing and pricing strategies under new tariffs. John McNulty (BMO Capital Markets): Inquired about the rise in working capital and the company's approach to mitigating low single-digit tariff impacts. CFO Gregory Lovins explained the increase was due to higher incentive and rebate payments, and tariff headwinds will be addressed through pricing surcharges and sourcing adjustments. Jeffrey Zekauskas (JPMorgan): Questioned if the decline in apparel demand is mainly a China event and rationale for accelerating share buybacks amid limited visibility. Management attributed the apparel softness to China tariffs and justified buybacks based on valuation, noting the recent uncertainty emerged after the repurchases. George Staphos (Bank of America): Probed Avery Dennison's capacity to support customer supply chain shifts out of China and the outlook for intelligent label growth. Management said its global network can accommodate moderate shifts, but overall industry capacity remains a constraint; intelligent label programs remain on track except for apparel-related volatility. Mike Roxland (Truist Securities): Sought details on competitive dynamics in intelligent labels for logistics and mitigation strategies for share erosion. CEO Deon Stander outlined innovation, process efficiency, and customer support as key levers to maintain majority share and support future logistics rollouts. In the coming quarters, the StockStory team will monitor (1) the pace at which apparel brands adapt sourcing and pricing strategies in response to tariffs, (2) the execution and scaling of intelligent label pilots in food and retail, and (3) signs of margin resilience as cost control measures are deployed. The timing and impact of potential large-scale logistics customer rollouts and further macroeconomic developments will also be critical factors to track. Avery Dennison currently trades at a forward P/E ratio of 16.7×. Should you double down or take your chips? See for yourself in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). 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