Keysight Technologies Inc: All-Time High Revenue (& Stock Price) Thanks to 5G

KEYS Stock Is a Top 5G Stock

Due to the stock market’s incredible rally over the past year, there’s no shortage of stocks making new highs. But not all soaring tickers are the same. Some stocks shoot through the roof simply because of bullish sentiment, while others are backed by improving fundamentals.

As investors, we like profits equally, but if you want to get into a hot stock right now, it’s probably a better idea to go with one that has a growing business.

And that, my dear reader, is why I’m bringing your attention to Keysight Technologies Inc (NYSE:KEYS) today.

Keysight stock is a top-performing 5G stock, but it’s not as well known as some of the other 5G players. The reason is perhaps that the company doesn’t serve consumers directly. It doesn’t have its own 5G network, nor does it build its own 5G devices. Instead, Keysight’s solutions help optimize networks and bring electronic products to market faster, at lower costs.

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Keysight Technologies Inc has expertise in design simulation, prototype validation, automated software testing, manufacturing analysis, and network-performance optimization.

These solutions would naturally cater to 5G carriers and equipment manufacturers, but Keysight actually serves a much wider customer base, spanning the worldwide communications, industrial, aerospace, defense, automotive, energy, semiconductor, and general electronics markets.

KEYS stock boasts strong performance, even by 5G stock standards. The chart below shows that Keysight stock has reached new heights in 2021 and that, over the past five years, it has returned a whopping 388%.

Keysight Technologies Inc (NYSE:KEYS) Stock Chart

Chart courtesy of StockCharts.com

As I implied earlier, KEYS stock is a soaring stock backed by a growing business.

According to its latest earnings report, Keysight Technologies generated $1.2 billion of revenue in its 2021 second quarter, which ended April 30. Excluding the impact of acquisitions, divestitures, and exchange-rate fluctuations, the amount represented a 33% increase year-over-year. (Source: “Keysight Technologies Reports Second Quarter 2021 Results,” Keysight Technologies Inc, May 19, 2021.)

The company has two reporting segments: Communications Solutions Group (CSG) and Electronic Industrial Solutions Group (EISG). CSG is by far the larger segment, accounting for 72% of Keysight’s revenue in its second quarter.

The company’s CSG revenue grew by 34% year-over-year to $877.0 million in the second quarter, “driven by ongoing investments across the 5G lifecycle and strong demand in space, satellite, signal monitoring, and early 6G research applications.” (Source: Ibid.)

That’s right, even 6G could become a growth driver for Keysight Technologies Inc.

And it’s not just its revenue that grew. The company’s orders totaled $1.3 billion in the second quarter, up by 22% year-over-year. The CSG segment was boosted by investments across the 5G lifecycle and achieved all-time record orders.

At the same time, Keysight generated free cash flow of $369.0 million, representing a 34% increase from a year earlier.

In fact, the second-quarter numbers from this 5G stock—orders, revenue, and free cash flow—each marked all-time records for the company.

While Keysight Technologies Inc didn’t say its adjusted net income of $270.0 million ($1.44 per share) was a new record, the amount represented a substantial improvement from the $148.0 million ($0.78 per share) in the year-ago period.

And 5G will likely continue to be a catalyst for Keysight stock.

In the company’s latest earnings conference call, its chairman, president, and chief executive officer, Ron Nersesian, said, “As 5G progresses and deployments drive sustained investment, we are uniquely positioned to capture the opportunities ahead as the ecosystem scales. Recent engagements include a broadening set of new customers as well as key industry players such as NEC, Fujitsu and MediaTek.” (Source: “Keysight Technologies, Inc. (KEYS) CEO Ron Nersesian on Q2 2021 Results – Earnings Call Transcript,” Seeking Alpha, May 19, 2021.)

Analyst Take

Put it all together and it’s easy to see why KEYS stock could be special.

The 5G revolution is still at an early stage, but Keysight Technologies Inc has already achieved remarkable growth. While Keysight stock is trading at a higher price than before, the continued growth in the company’s business means the best could be yet to come.