Agilent Technologies Inc (A)

Conclusion

Agilent Technologies provides instruments, services, consumables and software for life sciences, diagnostics and applied chemical markets, organised in three segments. On 2026-11-09 the share price was 180.17 USD, giving a market capitalisation of 50.80 billion USD.

The verdict is overvalued. The company trades at 35.3 times earnings against a ten-year median of 33.0, and at 26.0 times EV/EBITDA against a median of 22.5. The fair value band runs from 89.26 to 133.89 USD with a midpoint of 111.58 USD, a margin of safety of -38.1% at the current price. The DCF gives 65.41 USD per share, and the fair value from historical multiples is 157.75 USD. The reverse DCF implies growth of 19.0% a year, while revenue grew 5.4% a year over five years and free cash flow per share grew 9.6% a year over the same period.

What holds the case up is the balance sheet and returns: an Altman Z-score of 5.96, interest coverage of 16.6x, and ROIC of 16.8% against a WACC of 10.6%. Cash conversion is strong, with free cash flow at 99.7% of net income on a trailing basis. What would break it is the slow top line, with three-year revenue growth of only 0.5% a year, a valuation premium on every multiple against its own history, and a dividend yield of just 0.56%, so most of the return must come from growth the price already assumes.

Financial health

The financial strength is green, held up by the Altman Z-score of 5.96, net debt to EBITDA of 1.1x and interest coverage of 16.6x. The current ratio is 2.05 and the quick ratio is 1.41, with debt to equity at 0.54. The Altman Z-score of 5.96 sits in the safe zone; the Altman model was designed for manufacturers, and Agilent is a manufacturer of instruments, so the reading applies reasonably well. The insolvency risk is low, about 0.2% by the estimate of the Ohlson model over one to two years, based on figures as of 2025-10-31. Net debt has been modest relative to earnings, and the balance sheet offers ample room in a downturn.

Earnings quality

The earnings quality is green, supported by free cash flow conversion of 99.7% on a trailing basis and 100.3% over five years, a negative accrual ratio of -2.1%, and a Beneish M-score of -2.46, which is read as unlikely to signal manipulation. The share count fell at a compound rate of 1.9% a year over five years, which means buybacks. Stock-based compensation equals 1.8% of revenue, and free cash flow after it is 1.31 billion USD. The Piotroski score is 5 out of 9. Over the last eight quarters the company beat estimates six times and missed once, with an average surprise of 3.2%. Estimates for the current year were revised up by 2.4% over 90 days, although three estimates were cut in the last 30 days against two raised.

Profitability

The profitability is green. The operating margin is 22.2% against a ten-year median of 19.3%, and the net margin is 19.5% against 18.2%. The gross margin is 53.7% against a median of 53.9%, so the gain comes from operating costs rather than pricing. ROIC is 16.8% against a WACC of 10.6%, a given ROIC minus WACC value of 6.2%, and the five-year median ROIC is 18.5%. ROE of 19.6% is partly driven by leverage: the DuPont split shows a net margin of 18.8%, an asset turnover of 0.55 and an equity multiplier of 1.89. Most of the return comes from margin rather than leverage, which is a healthy sign.

Growth

The growth is green, supported by EPS compound growth of 14.8% over five years and 14.4% over ten years, and by 8 growing years out of 10. Revenue compound growth is weaker: 0.5% over three years, 5.4% over five years and 5.6% over ten. Free cash flow per share grew 6.0% a year over three years, 9.6% over five and 13.2% over ten. The three-year slowdown in revenue is the main concern, since the recent earnings gains have leaned on margins and buybacks more than on sales. Analysts expect next-year EPS growth of 8.5%.

Valuation

The valuation is red. Today's multiples sit above their ten-year medians: P/E 35.3 against 33.0, a premium of 6.8%; EV/EBITDA 26.0 against 22.5, a premium of 15.8%; price to free cash flow 35.4 against 31.0, a premium of 14.2%; price to sales 6.9 against 5.8, a premium of 18.3%. The DCF gives 65.41 USD per share, using a discount rate of 11.1%, and the fair value from historical multiples is 157.75 USD. The reverse DCF implies growth of 19.0%, against 5.4% revenue growth over five years and 9.6% free cash flow per share growth. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The dividend yield is 0.56% with a payout of 19.9% of free cash flow.

Risks

The weakest number is the three-year revenue growth of 0.5% a year: if the top line stays flat, the earnings growth of recent years will rest on margins and buybacks alone. The valuation premiums of 15.8% on EV/EBITDA and 18.3% on price to sales leave little room for disappointment. The Piotroski score of 5 out of 9 signals only moderate improvement across the nine tests. The DCF rests on a terminal share of 46.8%, so the value depends on long-run assumptions. The analysis does not include a debt maturity schedule or revenue by segment, so refinancing risk and segment trends cannot be assessed. The insolvency estimate uses figures as of 2025-10-31.