KEYS

We rate Keysight Technologies, Inc. (KEYS) as a Buy with a composite score of 67.0/100 at a current price of $300.80. The stock scores above average across the majority of our six quantitative factors and ranks #193 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in quality (80th percentile) and value (76th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (28th percentile) and momentum (68th percentile) tempers our overall conviction. We assign a Wide Moat rating (75/100), Medium uncertainty, and Standard capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Keysight Technologies, Inc. holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 67.0/100 places it at rank #193 in our full 7,333-stock universe. With a $31.4B market capitalization, Keysight Technologies, Inc. operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 11% and favorable momentum (68th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 62% (+19.8pp vs sector) narrow to operating margins of 17% (+15.4pp vs sector) and net margins of 19.7%, yielding a gross-to-net conversion rate of 32%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $300.80, Keysight Technologies, Inc. appears undervalued relative to its fundamentals. Our value factor score of 76/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 41.5x (a 87% premium to the sector median of 22.3x), EV/EBITDA of 51.3x (at a premium), P/B of 7.1x, P/S of 8.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to Keysight Technologies, Inc.. The stock presents a balanced risk profile: elevated market sensitivity (beta of 1.33) and elevated valuation multiple (P/E 41.5x) that leaves limited margin for error. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.33); elevated valuation multiple (P/E 41.5x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 75th percentile and quality factor at the 80th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 62% provide a buffer against cost pressures; above-average stability (75th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Keysight Technologies, Inc.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 17.1%, and the balance sheet is managed within acceptable parameters (D/E: 43%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; Keysight Technologies, Inc. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, Keysight Technologies, Inc. receives a Buy rating with a composite score of 67.0/100 (rank #193 of 7,333). Our quantitative framework assigns a Wide Moat (75/100, trend: stable), Medium uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 65/100.

Our analysis supports a constructive view on Keysight Technologies, Inc.. The combination of a wide competitive moat, medium uncertainty, and standard capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.