Keysight Technologies Offers Enough Quality Growth To Support A Robust Valuation

There are plenty of sayings (and cliches) regarding valuation and quality in the investment world, but it is nevertheless true that quality, value, and price are all distinct characteristics. I mention this because I think it’s an important backdrop for looking at Keysight Technologies (NYSE:KEYS). This leader in electronic design and test and measurement tools isn’t conventionally cheap, but I do think the less-cyclical nature of the business, the quality of the business, and the longer-term growth and margin potential combine to make a stronger value call than the multiples might otherwise suggest.

I’m not saying that Keysight is cheap, but I do think investors can expect to get solid value for the money here. I do see some risk that macro headwinds could prove stronger than the Street expects in calendar 2023, but I like the company’s long-term leverage to macro trends like data traffic growth, connectivity, and electrification. At $165 or below this would feel like an easier (or safer) call, but even at today’s price I think long-term investors can reasonably expect to be happy with the long-term returns.

 

Read more here: 

Keysight Technologies Offers Enough Quality Growth To Support A Robust Valuation

National Instruments Already Getting Ample Credit For What It Does Well

Although Wall Street often values companies on the basis of their perceived potential in the short term, it's typically a company's ability to execute that determines the long-term rewards for shareholders. That makes National Instruments (NASDAQ:NATI) a tough stock for GARP investors today; while the company's long-term revenue growth hasn't been bad, margin leverage has been elusive and returns on capital haven't been impressive. Making matters more complicated, the company's strong presence in software and its uncommon modular approach ought to be valuable points of distinction.

There are a lot of potential drivers that could lead to meaningful changes in National Instrument's future performance. The company is more aggressively targeting opportunities in semiconductor and wireless test, and the company's capabilities in embedded monitoring and control could leverage meaning growth in industrial IoT, autonomous vehicles, and other "smart machine" applications. Could is a tricky word, though, and a lot of improvement (and/or M&A potential) seems to be in today's share price.

Continue here:
National Instruments Already Getting Ample Credit For What It Does Well

Seeking Alpha: Newly Agile Agilent May Yet Be Weighed Down By Expectations

The life science tools market doesn't offer quite as much organic growth as many investors seem to think, but the high barriers to entry, relatively short product cycles, and consumables/service streams do tend to support good margins for the established players. The question facing Agilent (NYSE:A) isn't so much about whether the company can remain a strong player in markets like separation, mass spec, and pathology, but rather whether the company can reverse a long history of failing to live up to expectations and truly make the most of its technology and market positions.

At this point I'm a skeptic. Agilent shares may hold some appeal if you believe they can generate Waters-level (NYSE:WAT) FCF margins relatively soon, but I consider that to be a very ambitious expectation. Likewise, I'm a little concerned about the company's relatively weaker position in clinical markets next to Waters, Thermo Fisher (NYSE:TMO), Danaher (NYSE:DHR), and Bruker (NASDAQ:BRKR). Although I have little doubt that Agilent as a company will be fine, I'm concerned that there's too much optimism in the shares now that Agilent operates as a pure-play on life science and science tools.

Read more here:
Newly Agile Agilent May Yet Be Weighed Down By Expectations

Seeking Alpha: FEI Company Finally Showing Some Value Characteristics

It's been a long wait, but electron microscopy specialist FEI Company (NASDAQ:FEIC) is finally trading at a valuation where I think GARP investors might want to take a closer look. Of course, no opportunity comes without a cost and the price of this potential value opportunity is an eroding growth outlook that has seen estimates come down steadily for months. That, in turn, has led to a run of underperformance in the shares, which are down 3% since my last article, and underperforming relative to peers/comps like JEOL, Hitachi High-Tech, Keysight (NYSE:KEYS), PerkinElmer (NYSE:PKI) and Waters (NYSE:WAT).

Management is likely to be hard-pressed to achieve its long-term growth goal of 12% per year, and the upcoming Analyst Day may see revisions to the outlook that take another bite out of the valuation. Looking beyond that, I continue to believe that there is good growth potential in electronics, material sciences, life sciences, and resources that can support mid-to-high single-digit growth for the long term. A significant reliance on emerging markets is a risk factor, as are rival technologies, but there seems to be emerging value here.

Read the full article here:
FEI Company Finally Showing Some Value Characteristics