Keysight (KEYS) Down 1% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Keysight (KEYS). Shares have lost about 1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Keysight due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent catalysts for Keysight Technologies Inc. before we dive into how investors and analysts have reacted as of late.

Keysight Q1 Earnings Beat Estimates on Healthy Top-Line Growth

Keysight reported strong first-quarter fiscal 2026 results, with both top and bottom lines surpassing the Zacks Consensus Estimate.

The leading electronic design and testing solution provider reported higher year-over-year revenues, backed by solid demand in AI data centers and strength in aerospace, defense and government markets. Management’s ongoing focus on strategic collaborations and technology innovation remains a positive factor.

Net Income

Net income on a GAAP basis was $281 million or $1.63 per share compared with $169 million or 97 cents per share in the prior-year quarter. Top-line growth and income tax benefit boosted the bottom line during the quarter.

Non-GAAP net income in the reported quarter was $376 million or $2.17 per share compared with $317 million or $1.82 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 18 cents.

Revenues

Net sales during the quarter increased to $1.6 billion from $1.3 billion in the year-ago quarter. owing to a solid growth in the Communication Solutions Group (CSG) segment. The top line beat the consensus estimate of $1.54 billion. Total orders were $1.65 billion compared with $1.26 billion in the year-ago quarter.

CSG generated $1.12 billion in revenues, up from the year-ago quarter’s $883 million. The 27% year-over-year growth was primarily driven by rising investments in AI data centers, Edge AI, next-generation wireless (5G/6G and NTN), and continued strength in both wireline and wireless testing demand. The top line beat our estimate of $1.06 billion.

The Electronic Industrial Solutions Group (EISG) segment’s revenues increased to $476 million from $415 million in the prior-year quarter. Growth was driven by software-defined vehicles, strong semiconductor wafer test demand, and steady industrial and digital health momentum supported by AI-related PCB and interconnect orders. The top line missed our revenue estimate of $482.4 million.

Region-wise, Asia-Pacific revenues aggregated $592 million compared with $488 million in the prior-year quarter. The company reported a 23% year-over-year improvement in revenues from the Americas to $680 million. Revenues from Europe were $328 million, up 27% from the year-ago quarter's $259 million.

During the quarter, revenues from Aerospace, Defense and Government increased to $366 million from $311 million in the year-ago quarter. The company reported a 33% year-over-year improvement in revenues from the Commercial Communications to $758 million. Electronic Industrial generated $476 million in revenues, up from the year-ago quarter’s $415 million.

Other Details

During the quarter, the company’s non-GAAP gross profit totaled $1.07 billion compared with $854 million in the year-ago quarter, with gross margins of 66.7% and 65.8%, respectively. Non-GAAP operating income totaled $439 million compared with $354 million in the year-ago period, with operating margins of 27.4% and 27.3%, respectively.

CSG reported a non-GAAP operating income of $309 million compared with $240 million in the year-ago period. EISG non-GAAP operating income increased to $130 million from $114 million in the prior-year quarter.

Cash Flow & Liquidity

In the first quarter of fiscal 2026, Keysight generated $441 million of net cash from operating activities compared with $378 million in the year-ago quarter. As of Jan. 31, 2026, the company had $2.18 billion in cash and cash equivalents and $2.53 billion of long-term debt.

Outlook

For the second quarter of fiscal 2026, Keysight expects revenues in the range of $1.69-$1.71 billion. Non-GAAP earnings per share are estimated to be between $2.27 and $2.33.

How Have Estimates Been Moving Since Then?

Estimates review followed a upward path over the past two months.

VGM Scores

Currently, Keysight has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for value investors.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Keysight has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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Keysight Technologies Inc. (KEYS): Free Stock Analysis Report

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