Keysight Technologies (KEYS) Margin Gain To 17.3% Tests High P/E Bullish Narrative

Keysight Technologies (KEYS) has reported Q1 2026 revenue of US$1.6 billion and basic EPS of US$1.63, supported by trailing twelve month revenue of US$5.7 billion and EPS of US$5.71. This compares with a 60.6% year over year earnings increase and an improved net profit margin of 17.3% versus 12.2% a year earlier. Over recent quarters the company’s revenue has moved from US$1.29 billion in Q1 2025 to US$1.42 billion in Q4 2025 and US$1.6 billion in Q1 2026. Basic EPS has followed a similar path from US$0.98 to US$1.47 and now US$1.63. This pattern highlights stronger margins and profit quality that investors may weigh against the company’s growth profile. Overall, the latest results point to firmer profitability, placing margins at the center of how the market may interpret this update.

See our full analysis for Keysight Technologies.

With the headline numbers in place, the next step is to assess how these results align with widely followed growth and risk narratives around Keysight, and where the earnings story might challenge those views.

See what the community is saying about Keysight Technologies

Margins Strengthen Alongside US$5.7b Trailing Revenue

• Over the last twelve months, Keysight generated about US$5.7b in revenue and US$981 million in net income, which works out to a 17.3% net margin compared with 12.2% a year earlier.
• Consensus narrative points to higher software and services exposure as a key support for margins. The recent 60.6% earnings growth alongside the 17.3% margin fits that view, but the slower forecast revenue growth of about 8.5% per year than the broader US market limits how confident investors might be that this margin level can consistently support long term earnings growth.
  • Analysts expecting around 13% annual earnings growth are effectively counting on the current profit per dollar of sales staying healthy even as revenue grows at a mid single to high single digit pace.
  • At the same time, the past five year earnings trend shows a 5.2% annual decline, which is a reminder that the latest margin profile is only one part of a longer earnings story that has not been in a straight line.

Premium Valuation vs 59.8x P/E And DCF Fair Value

• Keysight is trading around US$342 with a trailing P/E of about 59.8x, compared with an industry average near 30.1x and peer average near 48.6x, while the DCF fair value in the data is US$223.38.
• Bears argue that paying such a premium multiple leaves little room for error. The combination of a 59.8x P/E and a share price above the US$223.38 DCF fair value supports that caution, even though earnings grew 60.6% over the last year.
  • The gap between the current price of roughly US$342 and analyst target level of US$371.46 in the dataset is narrower than the gap to the DCF fair value, so different valuation lenses point in different directions on upside potential.
  • Forecast earnings growth of about 13% per year with revenue at roughly 8.5% per year is solid, but bears focus on the five year earnings decline of 5.2% annually as evidence that the high multiple is grounded more in recent momentum than in a long multi year track record.

Skeptics watching the high P/E and DCF gap often want more detail on the cautious case before deciding how much risk they are taking on 🐻 Keysight Technologies Bear Case.

Fast EPS Recovery Tests The Bullish Growth Story

• EPS moved from a loss of US$0.42 in Q4 2024 to US$0.98 in Q1 2025 and then to US$1.63 by Q1 2026, alongside quarterly revenue rising from US$1.29b to US$1.6b over the same period.
• Bulls highlight this sharp EPS recovery and the 60.6% year over year earnings growth as evidence that Keysight can support forecasts around 13% annual earnings growth. The trailing twelve month EPS of US$5.71 with US$5.7b of revenue strongly supports that optimism, even though the longer five year trend still shows earnings declining 5.2% per year.
  • The move from US$611 million in trailing net income at the start of the period to US$981 million is consistent with the idea that profit drivers such as AI test demand and higher margin software can keep pulling EPS higher from here.
  • However, the fact that revenue in the trailing twelve month data rose from US$5.0b to US$5.7b while analyst growth forecasts sit below broader US market levels is a reminder that the bullish view leans heavily on continued margin strength rather than an expectation of very fast top line expansion.

If you want to see how bullish investors connect these growth numbers to their long term thesis on Keysight, take a look at the 🐂 Keysight Technologies Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Keysight Technologies on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Seen enough to form a first impression, but still weighing how the positives stack up against the risks and rewards others are watching? Act while the numbers are fresh in mind and test your own thesis against the 2 key rewards and 1 important warning sign

See What Else Is Out There

Keysight’s premium 59.8x P/E, its earnings decline over the past five years, and its slower forecast revenue growth raise questions about paying up for its current story.

If you are uneasy about that rich multiple and want stocks where valuation and fundamentals feel more grounded, run your eye over the 51 high quality undervalued stocks.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com