Should You Investigate Agilent Technologies, Inc. (NYSE:A) At US$119?

By
Simply Wall St
Published
December 20, 2020

Agilent Technologies, Inc. (NYSE:A) led the NYSE gainers with a relatively large price hike in the past couple of weeks. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at Agilent Technologies’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Agilent Technologies

What's the opportunity in Agilent Technologies?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 51.27x is currently well-above the industry average of 43.91x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Agilent Technologies’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Agilent Technologies look like?

NYSE:A Earnings and Revenue Growth December 20th 2020

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Agilent Technologies' earnings over the next few years are expected to increase by 68%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in A’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe A should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on A for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for A, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Agilent Technologies as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Agilent Technologies you should be aware of.

If you are no longer interested in Agilent Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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