Key insights
- Agilent Technologies (A) has experienced share price weakness recently, declining 18.3% year-to-date. A discounted cash flow (DCF) analysis suggests the stock is undervalued by approximately 10.3%. While not a strong signal, the potential undervaluation could lead to a minor positive adjustment in the stock price as investors reassess the company's intrinsic value.
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If you are wondering whether Agilent Technologies at around US$112.75 is starting to look attractively priced, the recent share performance gives you a lot to think about.
The stock has seen a 2.3% decline over the last week, a 10.4% decline over the last month, and is down 18.3% year to date and 7.7% over the past year, which may reflect shifting views on its risk and return profile.
Over the past few years the share price performance has also been weak, with a 15.9% decline over three years and a 4.4% decline over five years. This can influence how investors frame today's valuation and these returns set the backdrop for assessing whether the current price fairly reflects the business.
Agilent Technologies currently has a valuation score of 4 out of 6, and next you will see how different valuation methods arrive at that result and why there may be an even better way to judge value by the end of this article.
Agilent Technologies delivered -7.7% returns over the last year. See how this stacks up to the rest of the Life Sciences industry.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth today by projecting its future cash flows and discounting them back to a single present value figure.
For Agilent Technologies, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $1.01b. Analysts provide explicit forecasts for the next few years, and Simply Wall St extrapolates further out, with projected free cash flow of $2.26b in 2035. All of these future cash flows are discounted back into today’s dollars.
Putting those projections together results in an estimated intrinsic value of $125.67 per share, compared with a current share price of about $112.75. That implies the stock trades at roughly a 10.3% discount to this DCF estimate. On this model, the shares appear modestly undervalued.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Agilent Technologies is undervalued by 10.3%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Agilent Technologies.
For a profitable company like Agilent Technologies, the P/E ratio is a useful anchor because it links what you pay for the stock to the earnings the business is currently generating. Investors generally accept that higher expected growth and lower perceived risk can support a higher P/E, while slower growth or higher risk tend to justify a lower, more conservative multiple.
Agilent Technologies currently trades on a P/E of 24.7x. This sits below the Life Sciences industry average P/E of 30.7x and also below the peer group average of 29.0x, which suggests the market is assigning a lower earnings multiple than many comparable names.
Simply Wall St’s Fair Ratio for Agilent Technologies is 23.1x. This is a proprietary estimate of what a reasonable P/E might be given factors such as the company’s earnings growth profile, profit margins, industry, market cap and specific risks. Because it adjusts for these company level characteristics rather than relying purely on broad peer or industry comparisons, the Fair Ratio can offer a more tailored view of value. With the current P/E of 24.7x only modestly above the Fair Ratio, the shares appear slightly expensive on this metric.
Result: OVERVALUED
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Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced here as simple stories you create about Agilent Technologies that link your view on its future revenue, earnings and margins to a financial forecast, then to a fair value estimate that you can compare with today’s price. You can do this using easy tools on Simply Wall St’s Community page that update automatically when new earnings or news arrive. One investor might build a bullish Agilent Technologies Narrative closer to the US$165 upper analyst price target, based on confidence in new diagnostic approvals and digital pathology expansion supporting the modelled fair value of about US$163.29. Another might anchor to the US$120 lower target if more weight is placed on tariff costs, funding pressures and competition. Each Narrative provides a clear, numbers backed way to decide whether the current price around US$126.25 looks high, low or about right.
Do you think there's more to the story for Agilent Technologies? Head over to our Community to see what others are saying!
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.
Companies discussed in this article include A.
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