Keysight Technologies, Inc. (KEYS) Valuation

Executive Summary

Keysight Technologies, Inc. incorporated in Delaware on December 6, 2013, is a technology company that helps enterprises, service providers and governments accelerate innovation to connect and secure the world by providing electronic design and test solutions that are used in the simulation, design, validation, manufacture, installation, optimization and secure operation of electronics systems in the communications, networking and electronics industries. The firm also offers customization, consulting and optimization services throughout the customer's product lifecycle, including start-up assistance, asset management, up-time services, application services and instrument calibration and repair.

• $51.69 - Value (PPS) from Industry Relative Valuation
• $59.18  - Value (PPS) from Financial Relative Valuation
• $98.77 - Value (PPS) from Discounted Cash Flow

$84.25 - Reconciled Share Price Estimate

When comparing to Keysight's current share price of $103.06, a sell recommendation is issued.

Table of Contents

• Company Overview
• Future Strategies
• Revenue & COGS Trends
• The Customers & Revenue Geography
• SWOT Analysis

Company Overview

Keysight Technologies, Inc. (KEYS) currently trades on the NYSE with a current price of $103.06, a market cap of 19.28 Billion, and has a fiscal year of October 31st. All information is in millions of USD except for share prices or marked otherwise.

Future Strategies

The firm's strategy of bringing solutions to market that help customers develop new technologies and accelerate innovation provides a platform for long-term growth. It's expected to continue to see customers make R&D investments in certain next-generation technologies. The firm is still in the early market stages for these emerging technologies, such as 5G, next-generation automotive, internet of things ("IoT") and defense modernization and expect technology investments to continue.

Revenue & COGS Trends

2019 Revenue Values:

• $3,554.00 - Products
• $749.00 - Services and other.

2019 COGS Values:

• $1449.00 - Cost of products
• $318.00 - Cost of services

The Customers & Revenue Geography

Keysight Technologies provides system and software support to small, medium and large businesses. The pie chart below represents the 2018-2019 revenue percent change adjusted for currency differences.

Sources: Starbucks Corp.'s 10K & Bloomberg

SWOT Analysis

Strengths

• Automation of activities brought consistency of quality

• Successful track record of integrating complimentary firms through mergers & acquisition

• Highly skilled workforce through successful training and learning programs

• Highly successful at Go To Market strategies for its products

Weaknesses

• The marketing of the products left a lot to be desired

• Investment in Research and Development is below the fastest growing players in the industry

• Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present

Opportunities

• Stable free cash flow provides opportunities to invest in adjacent product segments

• The market development will lead to dilution of competitor’s advantage and enable Keysight Technologies to increase its competitiveness compare to the other competitors

• New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform

Threats

• Imitation of the counterfeit and low-quality product

• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits

Source: fernfortuniversity.com

Disclaimer

The Workday Cafe is not a registered investment, legal or tax advisor or a broker/dealer. All investment/financial opinions expressed by The Workday Cafe are from the personal research and experience of the evaluator and are intended for informational purposes only. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.