Keysight Technologies, Inc. KEYS is slated to report second-quarter fiscal 2021 results on May 19.

For the fiscal second quarter, Keysight anticipates revenues to be $1.19-$1.21 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.2 billion, indicating an improvement of 33.7% from the prior-year quarter’s reported figure.

Non-GAAP earnings per share are projected at $1.29-$1.35. The consensus mark for the bottom line of $1.34 per share, suggesting growth of 71.8% from the year-ago period’s reported figure.

Notably, the company’s earnings beat estimates in three of the trailing four quarters and missed the same once. It has a trailing four-quarter earnings surprise of 8.56%, on average.

Keysight Technologies Inc. Price and EPS Surprise

Keysight Technologies Inc. price-eps-surprise | Keysight Technologies Inc. Quote

Factors Likely to Impact Q2 Results

Continued momentum in high-speed networking, smartphone processors and high-performance data center applications is driving demand for the company’s offerings in process node technology testing and its momentum in the first-to-market solutions. This is likely to have favored the company’s performance in the fiscal second quarter.

Also, acceleration in chip design activity is likely to have positively contributed Keysight’s performance in the fiscal second quarter. Solid adoption of the company’s semiconductor measurement solutions as semiconductor companies remain focused on developing chips with the aid of next-generation process technologies is expected to have contributed to the to-be-reported quarter’s performance.

With continuation of remote work and online learning set up due to the COVID-19 crisis, demand for high-speed connectivity remains high. This is expected to have bolstered the adoption of the company’s 5G testing solutions in the fiscal second quarter. Keysight is also strengthening its product portfolio to enhance software testing capabilities.

Increasing demand for the company’s offerings is expected to have instilled investors’ confidence in the stock. Notably, shares of the company have gained 44.4% in the past year compared with the industry’s growth of 43.6%.

Strength in aerospace, defense & government (“ADG”) end markets driven by higher investments aimed at defense technology modernization across key regions, is likely to help Communications Solutions Group’s (CSG) segment’s performance in the to-be-reported quarter.

Keysight is poised to gain as economies increasingly focus on electro-magnetic spectrum operations, space and advanced commercial technologies that include 5G and early 6G research.

Further, accelerated 5G deployments and increasing investments in 400G and 800G ethernet for data centers is likely to drive Commercial Communications unit’s top line.

Notably, the Zacks Consensus Estimate for CSG is pegged at $872 million, indicating 33.5% growth from the year-ago period’s reported number.

Strength in uptake of the company’s semiconductor and general electronics measurement solutions is likely to contribute to the Electronic Industrial Solutions Group’s (EISG) segmental revenues. A stabilizing automotive sector is also anticipated to have contributed to the segment’s revenues.

Notably, the Zacks Consensus Estimate for EISG revenues is at $337 million, suggesting growth of 39.3% from the prior-year quarter’s reported figure.

Nonetheless, supply chain disruptions owing to COVID-19 crisis along with increasing expenses on product development are likely to have limited margin expansion the fiscal second quarter.

What the Zacks Model Unveils

Our proven model doesn’t predict an earnings beat for Keysight this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Keysight has an Earnings ESP of 0.00% and a Zacks Rank #3, currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are some stocks worth considering as our proven model shows that these too have the right combination of elements to beat on earnings this season.

HP Inc HPQ has an Earnings ESP of +4.49% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pure Storage PSTG has an Earnings ESP of +10.81% and carries a Zacks Rank of 2, at present.

NVIDIA NVDA has an Earnings ESP of +2.06% and currently carries a Zacks Rank of 2.

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