Keysight (KEYS) Up 5% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Keysight Technologies Inc. reported strong fourth-quarter fiscal 2025 results, with both revenue and net income surpassing estimates, driven by growth in AI data-center markets and defense sectors [3][4][5]. Financial Performance - Keysight's net income on a GAAP basis was $229 million or $1.33 per share, compared to a GAAP net loss of $73 million or $0.42 per share in the same quarter last year [4]. - Non-GAAP net income for the quarter was $331 million or $1.91 per share, up from $288 million or $1.65 in the prior-year quarter, exceeding the Zacks Consensus Estimate by $0.06 [4]. - Quarterly net sales increased to $1.42 billion from $1.29 billion year-over-year, beating the high end of guidance, with total orders rising 14% year-over-year to $1.53 billion [5]. Segment Performance - The Communication Solutions Group (CSG) generated revenues of $990 million, an 11% increase from $894 million in the prior-year quarter, driven by demand for AI data-center network solutions and 5G technologies [6]. - The Electronic Industrial Solutions Group (EISG) saw revenues rise to $429 million from $393 million, supported by investments in AI-driven technologies and growth in the semiconductor sector [7]. Regional Performance - Asia-Pacific revenues reached $581 million, up from $508 million year-over-year, while revenues from the Americas also improved by 6% to $581 million [8]. - European revenues increased by 12% to $257 million from $230 million in the prior-year quarter [8]. Profitability Metrics - Non-GAAP gross profit for the quarter was $912 million, with gross margins of 64.3%, compared to $829 million and 64.5% in the prior-year quarter [9]. - The non-GAAP operating margin was 26.3%, up from 25.8% year-over-year, with CSG reporting a margin of 26.7% and EISG reporting a margin of 25.4% [9]. Cash Flow and Outlook - Keysight generated $225 million in cash from operating activities, down from $359 million a year ago, and had $1.9 billion in cash and cash equivalents as of September 30, 2025 [10]. - For the next quarter, Keysight expects revenues between $1.53 billion and $1.55 billion, with non-GAAP earnings per share estimated between $1.95 and $2.01 [10]. Market Sentiment - There has been an upward trend in estimates for Keysight, indicating positive market sentiment [11]. - Keysight holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [13].