Intrinsic value of Agilent Technologies - A

Previous Close

$64.47

  Intrinsic Value

$97.83

stock screener

  Rating & Target

str. buy

+52%

Previous close

$64.47

 
Intrinsic value

$97.83

 
Up/down potential

+52%

 
Rating

str. buy

We calculate the intrinsic value of A stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 20.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
  5.28
  5.26
  5.23
  5.21
Revenue, $m
  4,892
  5,331
  5,787
  6,262
  6,756
  7,269
  7,803
  8,357
  8,933
  9,532
  10,155
  10,803
  11,478
  12,180
  12,912
  13,674
  14,469
  15,299
  16,165
  17,069
  18,014
  19,001
  20,034
  21,114
  22,243
  23,426
  24,664
  25,960
  27,318
  28,740
Variable operating expenses, $m
  809
  855
  902
  952
  1,004
  1,057
  1,113
  1,171
  1,232
  1,294
  1,063
  1,130
  1,201
  1,274
  1,351
  1,431
  1,514
  1,601
  1,691
  1,786
  1,885
  1,988
  2,096
  2,209
  2,327
  2,451
  2,581
  2,716
  2,858
  3,007
Fixed operating expenses, $m
  2,998
  3,063
  3,131
  3,200
  3,270
  3,342
  3,416
  3,491
  3,568
  3,646
  3,726
  3,808
  3,892
  3,978
  4,065
  4,155
  4,246
  4,339
  4,435
  4,532
  4,632
  4,734
  4,838
  4,945
  5,053
  5,165
  5,278
  5,394
  5,513
  5,634
Total operating expenses, $m
  3,807
  3,918
  4,033
  4,152
  4,274
  4,399
  4,529
  4,662
  4,800
  4,940
  4,789
  4,938
  5,093
  5,252
  5,416
  5,586
  5,760
  5,940
  6,126
  6,318
  6,517
  6,722
  6,934
  7,154
  7,380
  7,616
  7,859
  8,110
  8,371
  8,641
Operating income, $m
  1,086
  1,413
  1,754
  2,110
  2,482
  2,870
  3,274
  3,695
  4,134
  4,592
  5,366
  5,865
  6,385
  6,928
  7,495
  8,089
  8,709
  9,359
  10,039
  10,751
  11,497
  12,279
  13,099
  13,960
  14,863
  15,810
  16,805
  17,849
  18,946
  20,099
EBITDA, $m
  1,521
  1,860
  2,214
  2,584
  2,970
  3,372
  3,791
  4,228
  4,684
  5,158
  5,653
  6,170
  6,709
  7,272
  7,860
  8,475
  9,118
  9,791
  10,495
  11,233
  12,006
  12,816
  13,666
  14,556
  15,491
  16,472
  17,502
  18,583
  19,718
  20,911
Interest expense (income), $m
  82
  109
  126
  144
  162
  182
  202
  223
  245
  267
  291
  315
  341
  367
  395
  424
  453
  485
  517
  551
  586
  623
  662
  702
  745
  789
  835
  883
  934
  987
  1,042
Earnings before tax, $m
  978
  1,287
  1,610
  1,948
  2,301
  2,668
  3,051
  3,451
  3,867
  4,301
  5,051
  5,524
  6,017
  6,533
  7,072
  7,635
  8,225
  8,842
  9,488
  10,164
  10,874
  11,617
  12,397
  13,215
  14,074
  14,975
  15,922
  16,916
  17,960
  19,057
Tax expense, $m
  264
  347
  435
  526
  621
  720
  824
  932
  1,044
  1,161
  1,364
  1,491
  1,625
  1,764
  1,909
  2,062
  2,221
  2,387
  2,562
  2,744
  2,936
  3,137
  3,347
  3,568
  3,800
  4,043
  4,299
  4,567
  4,849
  5,145
Net income, $m
  714
  939
  1,176
  1,422
  1,679
  1,948
  2,227
  2,519
  2,823
  3,140
  3,687
  4,032
  4,393
  4,769
  5,162
  5,574
  6,004
  6,454
  6,926
  7,420
  7,938
  8,481
  9,050
  9,647
  10,274
  10,932
  11,623
  12,348
  13,111
  13,911

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,435
  8,101
  8,795
  9,517
  10,268
  11,048
  11,859
  12,701
  13,577
  14,487
  15,434
  16,418
  17,443
  18,511
  19,622
  20,781
  21,990
  23,251
  24,567
  25,941
  27,377
  28,877
  30,446
  32,088
  33,805
  35,602
  37,483
  39,453
  41,516
  43,678
Adjusted assets (=assets-cash), $m
  7,435
  8,101
  8,795
  9,517
  10,268
  11,048
  11,859
  12,701
  13,577
  14,487
  15,434
  16,418
  17,443
  18,511
  19,622
  20,781
  21,990
  23,251
  24,567
  25,941
  27,377
  28,877
  30,446
  32,088
  33,805
  35,602
  37,483
  39,453
  41,516
  43,678
Revenue / Adjusted assets
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
Average production assets, $m
  2,378
  2,591
  2,813
  3,043
  3,283
  3,533
  3,792
  4,062
  4,342
  4,633
  4,935
  5,250
  5,578
  5,919
  6,275
  6,646
  7,032
  7,435
  7,856
  8,296
  8,755
  9,235
  9,736
  10,261
  10,810
  11,385
  11,987
  12,617
  13,276
  13,968
Working capital, $m
  479
  522
  567
  614
  662
  712
  765
  819
  875
  934
  995
  1,059
  1,125
  1,194
  1,265
  1,340
  1,418
  1,499
  1,584
  1,673
  1,765
  1,862
  1,963
  2,069
  2,180
  2,296
  2,417
  2,544
  2,677
  2,817
Total debt, $m
  2,329
  2,660
  3,006
  3,366
  3,739
  4,128
  4,532
  4,951
  5,387
  5,840
  6,312
  6,802
  7,313
  7,844
  8,398
  8,975
  9,577
  10,205
  10,860
  11,545
  12,260
  13,007
  13,788
  14,606
  15,461
  16,356
  17,292
  18,274
  19,301
  20,378
Total liabilities, $m
  3,703
  4,034
  4,380
  4,740
  5,113
  5,502
  5,906
  6,325
  6,761
  7,214
  7,686
  8,176
  8,687
  9,218
  9,772
  10,349
  10,951
  11,579
  12,234
  12,919
  13,634
  14,381
  15,162
  15,980
  16,835
  17,730
  18,666
  19,648
  20,675
  21,752
Total equity, $m
  3,732
  4,067
  4,415
  4,778
  5,154
  5,546
  5,953
  6,376
  6,815
  7,272
  7,748
  8,242
  8,757
  9,292
  9,850
  10,432
  11,039
  11,672
  12,332
  13,022
  13,743
  14,497
  15,284
  16,108
  16,970
  17,872
  18,816
  19,805
  20,841
  21,926
Total liabilities and equity, $m
  7,435
  8,101
  8,795
  9,518
  10,267
  11,048
  11,859
  12,701
  13,576
  14,486
  15,434
  16,418
  17,444
  18,510
  19,622
  20,781
  21,990
  23,251
  24,566
  25,941
  27,377
  28,878
  30,446
  32,088
  33,805
  35,602
  37,482
  39,453
  41,516
  43,678
Debt-to-equity ratio
  0.620
  0.650
  0.680
  0.700
  0.730
  0.740
  0.760
  0.780
  0.790
  0.800
  0.810
  0.830
  0.840
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.890
  0.890
  0.900
  0.900
  0.910
  0.910
  0.920
  0.920
  0.920
  0.930
  0.930
Adjusted equity ratio
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502
  0.502

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  714
  939
  1,176
  1,422
  1,679
  1,948
  2,227
  2,519
  2,823
  3,140
  3,687
  4,032
  4,393
  4,769
  5,162
  5,574
  6,004
  6,454
  6,926
  7,420
  7,938
  8,481
  9,050
  9,647
  10,274
  10,932
  11,623
  12,348
  13,111
  13,911
Depreciation, amort., depletion, $m
  435
  447
  460
  474
  488
  502
  517
  533
  549
  566
  287
  305
  324
  344
  365
  386
  409
  432
  457
  482
  509
  537
  566
  597
  629
  662
  697
  734
  772
  812
Funds from operations, $m
  1,149
  1,387
  1,636
  1,896
  2,167
  2,450
  2,745
  3,052
  3,372
  3,706
  3,974
  4,338
  4,717
  5,113
  5,527
  5,960
  6,413
  6,887
  7,383
  7,902
  8,447
  9,017
  9,616
  10,244
  10,902
  11,594
  12,320
  13,082
  13,882
  14,723
Change in working capital, $m
  41
  43
  45
  47
  48
  50
  52
  54
  56
  59
  61
  64
  66
  69
  72
  75
  78
  81
  85
  89
  93
  97
  101
  106
  111
  116
  121
  127
  133
  139
Cash from operations, $m
  1,107
  1,344
  1,591
  1,849
  2,119
  2,400
  2,692
  2,998
  3,316
  3,647
  3,913
  4,274
  4,651
  5,044
  5,456
  5,885
  6,335
  6,805
  7,298
  7,814
  8,354
  8,921
  9,515
  10,138
  10,792
  11,478
  12,198
  12,955
  13,749
  14,584
Maintenance CAPEX, $m
  -126
  -138
  -151
  -164
  -177
  -191
  -205
  -220
  -236
  -252
  -269
  -287
  -305
  -324
  -344
  -365
  -386
  -409
  -432
  -457
  -482
  -509
  -537
  -566
  -597
  -629
  -662
  -697
  -734
  -772
New CAPEX, $m
  -204
  -213
  -222
  -231
  -240
  -249
  -259
  -269
  -280
  -291
  -303
  -315
  -328
  -341
  -356
  -371
  -386
  -403
  -421
  -440
  -459
  -480
  -502
  -525
  -549
  -575
  -602
  -630
  -660
  -691
Cash from investing activities, $m
  -330
  -351
  -373
  -395
  -417
  -440
  -464
  -489
  -516
  -543
  -572
  -602
  -633
  -665
  -700
  -736
  -772
  -812
  -853
  -897
  -941
  -989
  -1,039
  -1,091
  -1,146
  -1,204
  -1,264
  -1,327
  -1,394
  -1,463
Free cash flow, $m
  777
  993
  1,219
  1,455
  1,702
  1,959
  2,228
  2,508
  2,800
  3,104
  3,341
  3,672
  4,018
  4,379
  4,756
  5,150
  5,562
  5,993
  6,445
  6,917
  7,413
  7,932
  8,476
  9,047
  9,646
  10,275
  10,935
  11,628
  12,356
  13,121
Issuance/(repayment) of debt, $m
  318
  332
  346
  359
  374
  389
  404
  420
  436
  453
  471
  490
  510
  531
  554
  577
  602
  628
  655
  684
  715
  747
  781
  817
  855
  895
  937
  981
  1,028
  1,077
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  318
  332
  346
  359
  374
  389
  404
  420
  436
  453
  471
  490
  510
  531
  554
  577
  602
  628
  655
  684
  715
  747
  781
  817
  855
  895
  937
  981
  1,028
  1,077
Total cash flow (excl. dividends), $m
  1,094
  1,324
  1,564
  1,814
  2,076
  2,348
  2,631
  2,927
  3,236
  3,557
  3,813
  4,163
  4,528
  4,910
  5,310
  5,727
  6,164
  6,621
  7,100
  7,602
  8,128
  8,679
  9,257
  9,864
  10,501
  11,170
  11,872
  12,609
  13,384
  14,197
Retained Cash Flow (-), $m
  -316
  -334
  -348
  -362
  -377
  -392
  -407
  -423
  -440
  -457
  -475
  -494
  -515
  -536
  -558
  -582
  -607
  -633
  -661
  -690
  -721
  -753
  -788
  -824
  -862
  -902
  -944
  -989
  -1,036
  -1,085
Prev. year cash balance distribution, $m
  1,415
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  2,193
  990
  1,216
  1,452
  1,699
  1,956
  2,224
  2,504
  2,796
  3,100
  3,337
  3,668
  4,014
  4,375
  4,751
  5,145
  5,557
  5,988
  6,439
  6,912
  7,407
  7,926
  8,470
  9,040
  9,639
  10,268
  10,927
  11,620
  12,348
  13,112
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  2,103
  906
  1,058
  1,196
  1,317
  1,420
  1,503
  1,565
  1,606
  1,625
  1,585
  1,565
  1,526
  1,469
  1,395
  1,308
  1,209
  1,103
  991
  878
  766
  658
  555
  460
  375
  300
  235
  180
  135
  99
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Agilent Technologies, Inc. provides application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. The Company serves the life sciences, diagnostics and applied chemical markets. It has three business segments: life sciences and applied markets business, diagnostics and genomics business, and Agilent CrossLab business. Its life sciences and applied markets business segment offers instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular level. Its diagnostics and genomics business segment includes the reagent partnership, pathology, companion diagnostics, genomics and the nucleic acid solutions businesses. Its Agilent CrossLab business segment spans the entire lab with its consumables and services portfolio.

FINANCIAL RATIOS  of  Agilent Technologies (A)

Valuation Ratios
P/E Ratio 30.3
Price to Sales 4.6
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 23.4
Price to Free Cash Flow 29.1
Growth Rates
Sales Growth Rate 6.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.6%
Cap. Spend. - 3 Yr. Gr. Rate -3%
Financial Strength
Quick Ratio 13
Current Ratio 0.2
LT Debt to Equity 37.3%
Total Debt to Equity 41.6%
Interest Coverage 11
Management Effectiveness
Return On Assets 9.3%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 10.5%
Ret/ On T. Cap. - 3 Yr. Avg. 8.2%
Return On Equity 15.1%
Return On Equity - 3 Yr. Avg. 11.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 53.9%
Gross Margin - 3 Yr. Avg. 52.2%
EBITDA Margin 24.5%
EBITDA Margin - 3 Yr. Avg. 21.7%
Operating Margin 18.8%
Oper. Margin - 3 Yr. Avg. 15.5%
Pre-Tax Margin 18%
Pre-Tax Margin - 3 Yr. Avg. 14.3%
Net Profit Margin 15.3%
Net Profit Margin - 3 Yr. Avg. 12.1%
Effective Tax Rate 14.8%
Eff/ Tax Rate - 3 Yr. Avg. 12.9%
Payout Ratio 24.9%

A stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the A stock intrinsic value calculation we used $4472 million for the last fiscal year's total revenue generated by Agilent Technologies. The default revenue input number comes from 0001 income statement of Agilent Technologies. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our A stock valuation model: a) initial revenue growth rate of 9.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for A is calculated based on our internal credit rating of Agilent Technologies, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Agilent Technologies.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of A stock the variable cost ratio is equal to 17.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2933 million in the base year in the intrinsic value calculation for A stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Agilent Technologies.

Corporate tax rate of 27% is the nominal tax rate for Agilent Technologies. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the A stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for A are equal to 48.6%.

Life of production assets of 17.2 years is the average useful life of capital assets used in Agilent Technologies operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for A is equal to 9.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4831 million for Agilent Technologies - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 319.952 million for Agilent Technologies is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Agilent Technologies at the current share price and the inputted number of shares is $20.6 billion.

Management's discussion and analysis

Agilent Technologies Inc. ("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that includes instruments, software, services and consumables for the entire laboratory workflow.

In November 2015, we completed the acquisition of Seahorse Bioscience ("Seahorse"), a leader in providing instruments and assay kits for measuring cell metabolism and bioenergetics for $242 million in cash. Seahorse's technology enables researchers to better understand cell health, function and signaling, and how the cell may be impacted by the introduction of a specific drug, by providing real-time kinetics to unlock essential cellular bioenergetics data. The financial results of Seahorse have been included within Agilent's consolidated financial statements from November 1, 2015.

On March 2, 2016, Agilent made a preferred stock investment in Lasergen for $80 million. Agilent’s initial ownership stake was 48 percent and we have also joined the board of Lasergen and signed a collaboration agreement. We have the option to acquire all of the remaining shares of Lasergen until March 2, 2018, for additional consideration of $105 million. Lasergen is a Variable Interest Entity (“VIE”), however, we do not consolidate the entity in our financial statements because we do not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance nor are we the primary beneficiary. Because of the nature of the preferred stock of Lasergen that we own, we account for this investment under the cost method.

On August 1, 2016 we completed the acquisition of substantially all of the assets of iLab Solutions LLC ("iLab"), a cloud-based solutions provider for core laboratory management.  iLab's offerings enables customers to easily and accurately book time in shared facilities, to bill and invoice for projects, to manage studies, to generate reports and business intelligence, and to schedule instrument reservations across multiple projects. The purchase price was $26 million in cash. The financial results of iLab have been included within Agilent's consolidated financial statements from August 1, 2016.

Agilent's net revenue of $4,202 million in 2016 increased 4 percent when compared to 2015. Foreign currency movements for 2016 had an unfavorable impact of approximately 2 percentage points compared to 2015. Agilent's net revenue of $4,038 million was flat in 2015 when compared to 2014.

The life sciences and applied markets business brings together Agilent's analytical laboratory instrumentation and informatics. Revenue increased 1 percent in 2016 when compared to 2015. Foreign currency movements had an unfavorable impact of approximately 2 percentage points in 2016 when compared to 2015. For the year ended October 31, 2016 and excluding the impact of foreign currency movements, acquisitions and the NMR business our performance within the life sciences market continued to show strong revenue growth from the pharmaceutical and biotechnology markets. Within the applied markets, and excluding the impact of foreign currency movements and the NMR business, there was strong growth in both the environmental and food markets, but revenue from sales to other applied markets was weak with a decline in revenue from sales to the chemical and energy markets. Revenue decreased 2 percent in 2015 when compared to 2014. For the year ended October 31, 2015 and 

excluding the impact of currency movements and the NMR business, our performance within the life sciences business showed consistent revenue growth from sales to the pharmaceutical and biotechnology market partially offset by a decrease in the revenue generated from sales to the life sciences research market. Within applied markets and excluding the impact of currency movements and the NMR business, there was weakness in the chemical and energy markets in the year ended October 31, 2015 when compared to the prior year.

The diagnostics and genomics business includes genomics, nucleic acid contract manufacturing and the pathology, companion diagnostics and reagent partnership businesses. Revenue increased 7 percent in 2016 when compared to 2015. Foreign currency movements had an unfavorable impact of approximately 1 percentage points in 2016 when compared to 2015. Excluding the impact of foreign currency movements and acquisitions, growth in revenue from sales to the diagnostics and clinical markets continued to be strong, led by our companion diagnostics and genomics businesses in the year ended October 31, 2016 when compared to the prior year. Revenue was flat in 2015 when compared to 2014. Excluding foreign currency movements, our growth in revenue from sales to the diagnostics and clinical markets was strong in the year ended October 31, 2015 when compared to the prior year.

The Agilent CrossLab business combines our analytical laboratory services and consumables business. Revenue increased 7 percent in 2016 when compared to 2015. Foreign currency movements had an unfavorable impact of approximately 2 percentage points in 2016 when compared to 2015. Excluding the impact of foreign currency movements and acquisitions, there was growth in sales to all key markets. The pharmaceutical and biotechnology markets led all the markets in revenue and revenue growth along with very strong revenue growth from the food markets. In addition, we saw moderate growth from the environmental market and modest revenue growth from the chemical and energy markets. Revenue increased 2 percent in 2015 when compared to 2014. Excluding the impact of foreign currency movements there was growth in sales to all key end markets, in particular, the pharmaceutical and biotechnology market in the year ended October 31, 2015 when compared to the prior year. Within the applied markets revenue in chemical and energy end markets were slower but still reported growth when adjusted for currency movements.

Net income from continuing operations was $462 million in 2016 compared to net income from continuing operations of $438 million and $232 millionin 2015 and 2014, respectively. As of October 31, 2016 and 2015 we had cash and cash equivalents balances of $2,289 million and $2,003 million, respectively.

On November 22, 2013 we announced that our board of directors had authorized a share repurchase program. The existing program is designed to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs to target maintaining a weighted average share count of approximately 335 million diluted shares. For the years ended October 31, 2016, 2015 and 2014 we repurchased 2.4 million shares for $98 million, 6 million shares for $267 million and 4 million shares for $200 million, respectively. All such shares and related costs are held as treasury stock and accounted for using the cost method.

On May 28, 2015 we announced that our board of directors had approved a new share repurchase program (the "2015 repurchase program"). The 2015 share repurchase program authorizes the purchase of up to $1.14 billion of our common stock through and including November 1, 2018. The 2015 repurchase program does not require the company to acquire a specific number of shares and may be suspended or discontinued at any time. During the year ended October 31, 2016, upon the completion of our previous repurchase program, we repurchased approximately 8.3 million shares for $336 million under this authorization. All such shares and related costs are held as treasury stock and accounted for using the cost method.

For the years ended October 31, 2016, 2015 and 2014 cash dividends of $150 million, $133 million and $176 million were paid on the company's outstanding common stock, respectively. On November 16, 2016, we declared a quarterly dividend of $0.132 per share of common stock, or approximately $43 million which will be paid on January 25, 2017 to shareholders of record as of the close of business on January 3, 2017. The timing and amounts of any future dividends are subject to determination and approval by our board of directors.

Looking forward, we expect to continue to focus on the growth of the operating margin in our businesses by simplifying our operations, differentiating product solutions and improving our customer's experience. We anticipate returning a significant proportion of our cash flow to shareholders through our dividend and share repurchase programs. End market growth outlook in today's uncertain political and economic environment is unpredictable and challenging. However, we expect continued strength in the pharmaceutical markets and solid growth in the food and environmental markets but we remain uncertain about the growth in the chemical and energy markets. The unfavorable effects of changes in foreign currency exchange rates has decreased revenue by approximately 2 percentage points for the year ended October 31, 2016. Costs and expenses, incurred in local currency, were subject to the favorable effects due to changes in foreign currency exchange rates reducing our overall net exposure. The impact of foreign currency exchange rates movements can be positive or negative in any period and is calculated by applying the prior period foreign currency exchange rates to the current year period. We anticipate that changes in foreign currency exchange rates will continue to have an unfavorable impact on our performance for the near future.

[Source: Form 10-K dated 2016-12-20]

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COMPANY NEWS

▶ When Should You Buy Agilent Technologies Inc (NYSE:A)?   [Oct-19-18 01:32PM  Simply Wall St.]
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▶ Agilent Technologies Earnings Beat, Revenue Inline In Q3   [Aug-14-18 09:26PM  Investing.com]
▶ Agilent: Fiscal 3Q Earnings Snapshot   [04:18PM  Associated Press]
▶ One of Humana's major shareholders slashed its position by 70 percent   [02:44PM  American City Business Journals]
▶ Turkey Ruins Week for Dow, S&P   [Aug-13-18 09:15AM  Zacks]
▶ San Antonio oil and gas explorer invests in downtown Houston office   [Aug-09-18 03:21PM  American City Business Journals]
▶ Agilent Technologies Completes Acquisition of ProZyme   [Aug-01-18 04:05PM  Business Wire]
▶ Agilent Announces CFO Transition   [04:02PM  Business Wire]
▶ Agilent Receives Sustainability Leadership Award   [Jul-23-18 11:00AM  Business Wire]
▶ Defense program with Spirit AeroSystems ties on track for 2018 design milestone   [Jun-27-18 02:16PM  American City Business Journals]
▶ Agilent Opens New Logistics Hub in China   [11:00AM  Business Wire]
▶ Agilent Enables CISH on Dako Omnis   [11:00AM  Business Wire]
▶ Agilent Insources to Optimize Logistics Operations   [Jun-04-18 11:00AM  Business Wire]
▶ Agilent Demonstrates Innovation with Purpose at ASMS 2018   [Jun-01-18 11:00AM  Business Wire]
▶ Agilent Technologies to Acquire Assets of Ultra Scientific   [May-30-18 04:30PM  Business Wire]
▶ [$$] Charting the Market   [May-19-18 12:01AM  Barrons.com]

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