Keysight Technologies (KEYS:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Keysight Technologies(KEYS:NYS)

Technology:Scientific & Technical Instruments

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
$60.07 (USD) 19/12/2018

Weighted Valuation
$67.47 (USD)

Overall Rating
Undervalued by 12.3%

Valuation Models Analyst Consensus: $77.50 (USD)
(in order of importance) Adjusted Book Value: $52.41 (USD)
Valuation Methods This company is:
Cash Flow: Fairly valued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (KEYS:NYS USD)

Price 60.07
Range 59.41 – 61.92
52 week 41.54 – 66.50
Open 60.94
Vol / Avg. 2.15M/1.81M
Mkt cap 11.27B
P/E 52.12
Div/yield 0.00/0.00
EPS 0.86
Shares 187.64M
Beta 0.00

Company Description

Keysight Technologies Inc provides electronic design and test solutions to the communications and electronics industries. The firm operates in two segments: measurement solutions and customer support and services. The measurement solutions segment generates the vast majority of revenue and sells hardware and software products, including radio frequency, microwave, and digital solutions. The customer support and services segment provides repair and calibration services to customers who have purchased Keysight products and helps resell refurbished equipment. Over half of Keysight’s sales are generated in the United States, China, and Japan.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for KEYS:NYS

Using a discounted cash flow model we generated an intrinsic value of $58.25 (USD) for KEYS:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

KEYS:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $58.25 1% 5% 1% 5%
WACC (or Ke) 9.07 $71.16 $49.00
Terminal Growth Rate 3.00 $49.96 $69.81
Tax Rate 0.27 $63.03 $53.47
Cash Flow 1,269,349,733 $54.58 $61.92
Capital Expenditures -87,600,000 $58.01 $58.49
Long Term Debt 1,100,000,000 $58.54 $57.96

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $44.28 (USD) for KEYS:NYS. We also generated a valuation of $86.10 (USD) using other metrics and comparables.
The comparable companies were FLIR Systems (FLIR:NAS), Fortive (FTV:NYS), MKS Instruments (MKSI:NAS), Teledyne Technologies (TDY:NYS) and Trimble (TRMB:NAS).

Company KEYS:NYS End Date Value
Earnings/Share $0.86 (USD)
Book Value/Share $14.00 (USD)
Sales/Share $19.50 (USD)
Cash Flow/Share $1.93 (USD)
EBITDA/Share ($0.09) (USD)
Price Based on Comps Adjustment Factor (%)
$28.97 (USD) -24.4
$48.25 (USD) 67.2
$60.01 (USD) -13.0
$24.65 (USD) -34.5
($1.48) (USD) -2.3
49.85 PE Ratio 33.68 48.27 24.07 10.85 26.70 58.51
4.41 PB Ratio 3.45 3.27 4.36 2.34 3.66 3.61
3.17 PS Ratio 3.08 3.55 3.72 2.04 2.90 3.18
31.96 PCF Ratio 17.59 17.25 19.79 12.06 18.51 20.35
21.22 EV to EBITDA 15.75 16.18 17.84 6.59 16.85 21.27


Using a multiples approach we generated a valuation of  $34.45 (USD) for KEYS:NYS

Company KEYS:NYS End Date Value
Earnings/Share $0.86 (USD)
Book Value/Share $14.00 (USD)
Sales/Share $19.50 (USD)
Cash Flow/Share $1.93 (USD)
EBITDA/Share ($0.09) (USD)
Price Based on Comps Adjustment Factor
$13.57 (USD) 0
$56.23 (USD) 0
$40.68 (USD) 0
$27.32 (USD) 0
$0.00 (USD) 0
Ratios Ratio Average
PE Ratio 15.77
PB Ratio 4.02
PS Ratio 2.09
PCF Ratio 14.13
EV to EBITDA 12.34

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  KEYS:NYS for the last 4 years was  4.02

We ran the Adjusted Book Value for  KEYS:NYS and generated a book value of  $13.04 (USD)
By multiplying these we get an adjusted valuation of  $52.41 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for KEYS:NYS. The 2 analysts have a concensus valuation for KEYS:NYS for 2019 of $77.50 (USD).

KEYS:NYS Keysight Technologies

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 0 0 5.0000 Buy 2018-12-18

Current Price: 60.07 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 3.62 4.15 4.45
# EPS Analysts 2 2 1
Mean Revenue 4,206.40 4,758.70
# Revenue Analysts 2 1
Mean Target Price 77.50
Mean Cash Flow 3.88 4.52
Mean EBITDA 917.50 1,137.00
Mean Net Income 657.20 761.50
Mean Debt Outstanding 999.40 221.30
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure 90.00 94.50

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

Notice to User

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