Improved sales of testing equipment led to a 5.4% revenue bump for this company during the most-recent quarter.
The firm plans to return 85% of its free cash flow to shareholders in the form of dividends and share buybacks.
Meanwhile, the stock trades at 28.4 times the company’s 2022 earnings forecast.
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AGILENT TECHNOLOGIES INC. (New York symbol A; www.agilent.com) makes specialized testing equipment for medical research laboratories and industrial clients. Its equipment includes mass spectrometers, used to analyze substances.
The COVID-19 pandemic continues to spur strong demand for Agilent equipment from pharmaceutical firms working on vaccines and drugs. Demand from chemical and energy firms is also improving.
In April 2021, Agilent paid $550 million for Resolution Bioscience Inc., which makes equipment to detect cancer in blood samples. Depending on that firm’s future performance, Agilent will have to pay an additional $145 million.
In its fiscal 2022 second quarter, ended April 30, 2022, the company’s revenue rose 5.4%, to $1.61 billion from $1.53 billion a year earlier. If you disregard the contribution of recent acquisitions and currency exchange rates, revenue gained 5.2%. Thanks to an effective cost-control program, earnings before unusual items improved 13.7%, to $340 million from $299 million. Due to fewer shares outstanding, per-share earnings gained 16.5%, to $1.13 from $0.97.
Agilent ended the quarter with cash of $1.21 billion, and its long-term debt was $2.73 billion, or just 7% of its market cap.
Growth Stocks: Shareholder-friendly policies should lift the stock price
It plans to return 85% of its free cash flow (regular cash flow less maintenance capital expenditures) to shareholders in the form of dividends and share buybacks. In fiscal 2021, it returned 83% of its free cash flow of $1.1 billion to its investors.
The company expects its revenue for all of fiscal 2022 will improve between 8.0% and 9.0%. It also expects to earn $4.86 to $4.93 a share for the year; the stock trades at 28.4 times the midpoint of that range. That’s an acceptable p/e as Agilent continues to spend a high 7% of its revenue on research.
It also recently raised its quarterly dividend by 8.2%. The new annual rate of $0.84 yields 0.6%.
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