KEYS, Keysight Technologies, Inc.
Keysight's portfolio of hardware, software, and services enables our customers' workflows as they design, validate, manufacture, deploy, and optimize their products and solutions.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Products (76%) and Service, Other (24%).
- Situation
- Cyclical. margins collapse repeatedly across the cycle, a single year misleads; look at normalized, through-cycle earnings and the balance sheet at the trough.
- What moves the needle
- Volume against price, and shelf position. What decides it: whether it can raise prices without losing the customer, and whether the brand still commands its margin.
- Is it a good business?
- Return on capital has run in the teens (median 19%, above 15% in 6 of 10 years). Owner earnings agree: roughly 18% of revenue reaches owners as cash, consistently. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →CSG is 69% of revenue, so this is largely a single-segment business.
- CSG69%$3.7B
- EISG31%$1.6B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMApr 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $2.9B | $3.2B | $3.9B | $4.3B | $4.2B | $4.9B | $5.4B | $5.5B | $5.0B | $5.4B | $6.1B |
| Gross marginGross mgn | 56% | 53% | 54% | 59% | 60% | 62% | 64% | 65% | 63% | 62% | 64% |
| Operating marginOp. mgn | 13.9% | 4.6% | −10.2% | 16.5% | 18.1% | 21.9% | 24.6% | 24.9% | 16.7% | 16.3% | 18.2% |
| Net incomeNet inc. | $335M | $102M | $165M | $621M | $627M | $894M | $1.1B | $1.1B | $614M | $850M | $1.1B |
| EPS (diluted)EPS | $1.95 | $0.56 | $0.86 | $3.25 | $3.32 | $4.78 | $6.18 | $5.91 | $3.51 | $4.91 | $6.09 |
| Owner earningsOwner earn. | $329M | $256M | $423M | $878M | $899M | $1.1B | $959M | $1.2B | $898M | $1.3B | $1.4B |
| ROICROIC | 20% | 2% | -9% | 19% | 19% | 27% | 30% | 27% | 12% | 11% | 16% |
| Cash & investmentsCash+inv | $812M | $852M | $930M | $1.6B | $1.8B | $2.1B | $2.0B | $2.5B | $1.8B | $1.9B | $2.4B |
| Net debt / (cash)Net debt | $281M | $1.2B | $860M | $190M | $33M | ($261M) | ($249M) | ($678M) | ($6M) | $661M | $99M |
| Book value / shareBVPS | $8.80 | $12.69 | $12.74 | $15.73 | $17.44 | $20.24 | $22.86 | $26.00 | $29.17 | $33.99 | $36.60 |
Owner’s Scorecard
Will it survive?
- ComfortableOperating income $876M ÷ interest expense $96M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- ModerateTotal debt $2.5B ÷ operating income $876M
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $661MModest net debtCash $1.9B − debt $2.5B
Netting $1.9B of cash and short-term investments against $2.5B of debt leaves $661M owed, about 0.8× a year's operating profit, versus the gross figure above. It also holds $17M in longer-dated marketable securities; counting those, it sits at $644M of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Capital-hungryDSO 64 + DIO 188 − DPO 64 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- SolidNOPAT $700M ÷ invested capital $6.5B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $1.3B = operating cash $1.4B − capex $128M
What an owner could take out without starving the business. That's 24% of revenue. Treating stock comp as the real expense it is (less $162M of SBC) leaves $1.1B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $1.4B ÷ net income $850M
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Reinvests most of itDividends + buybacks $375M ÷ Owner Earnings $1.3B
Of $1.3B Owner Earnings, $375M (29%) went back to shareholders, $0 dividends, $375M buybacks. Net of $162M stock comp, the real buyback was about $213M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.57×HarvestingCapex $128M ÷ depreciation $225M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 6 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 14% (FY2016) → 16% (FY2025)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC 32%
Every extra dollar the company reinvested earned a high return, it is still compounding, not coasting on an old moat.
- Owner earnings growth +16%/yr
Free cash to owners grew about 16% a year over the record.
- Worst year 2018 · −10.2% op. margin
Operations went underwater in 2018, understand why before trusting the good years.
- Share count +0.1%/yr
Roughly flat share count, little dilution, little buyback.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2025
Over the record, the business generated $9.7B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$1.4B · 14%
- Buybacks$3.8B · 39%
- Retained (debt / cash)$4.5B · 47%
It reinvested $1.4B (14%) back into the business and returned $3.8B (39%) to owners, $0 in dividends, $3.8B in buybacks. Total debt rose $1.4B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio210:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$162M
The slice of the business handed to employees in shares this year, 3% of revenue, equal to 18% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
4 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $5.4B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity PassCurrent ratio ≥ 2× · 2.35×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt NearDebt ≤ working capital · $2.5B vs $2.5B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +319%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $4.91/share and book value $33.99/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Keysight Technologies, Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $1.4B on 173M diluted shares; net debt $99M. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationRisk Factors
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“As a global company, we have key customers all over the world, although no one customer makes up more than 10 percent of our revenue.”
From the recordRevenue exposed (TTM)$6.1B - Pricing power & competitionRisk Factors
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“Since a significant portion of our operating expenses is relatively fixed in nature due to sales, R&D and manufacturing costs, if we were unable to respond quickly enough, these pricing pressures could further reduce our operating margins.”
From the recordOperating margin18.2% now (TTM), off a 24.9% peak (FY2023) - Concentrated dependenceRisk Factors
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Our business depends on our customers' ability to manufacture, design, and sell their products in the marketplace.”
From the recordOwner-earnings margin at stake (TTM)22% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“We were in compliance with the covenants of the Revolving Credit Facility during the year ended October 31, 2025.”
From the recordBalance sheet (TTM)$661M modest net debt · interest covered 9.1× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“From time-to-time parties have claimed that one or more of our solutions or services infringe their intellectual property rights.”
A judgment, not a number, weigh it against the filing yourself. - DilutionRisk Factors
Whether your slice quietly shrinks. New shares fund the company at the existing owner's expense.
“We may need additional financing in the future to meet our capital needs or to make opportunistic acquisitions, and such financing may not be available on terms favorable to us, if at all, and may be dilutive to existing shareholders.”
From the recordDiluted share count+0.1%/yr (FY2016→TTM) - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“However, due to factors such as inflation, the potential for recession, trade barriers or restrictions, increased geopolitical tensions, including regional conflict and war, the markets we serve may experience increased volatility and may not experience the seasonality or cyclicality that we expect.…”
From the recordWorst year on record−10.2% operating margin (FY2018)
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “The tax rate in 2024 was higher than the U.S. statutory rate primarily due to the impact of a one-time income tax charge to decrease deferred tax asset values from the Singapore statutory tax rate to an incentive tax rate, partially offset by a one-time income tax benefit related to the GILTI tax de…”
- “Net income of $850 million for 2025 increased 38 percent compared to 2024, primarily driven by higher revenue and net gains on equity investments and derivative instruments and lower income tax provisions, partially offset by higher people-related costs, higher acquisition and integration costs, imp…”
- “Despite macroeconomic uncertainties, customer engagement remained high in key long-term strategic initiatives, including R&D for AI-driven demand for advanced semiconductor technologies, software-defined vehicles, industrial IoT, digital health, and fab capacity.”
- “However, significant details regarding the G7 announcement remain uncertain and individual countries that have enacted the OECD agreement, including countries not within the G7, must amend their local legislation for the G7 announcement to become effective.”
- “If the U.S.' relationship with countries subject to increased tariffs results in additional trade disputes, trade protection measures, retaliatory actions and increased barriers, policies that favor domestic industries, or increased import or export licensing requirements or restrictions, then our d…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Instruments
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| KLACKLA Corporation | $12.2B | 61% | 6.4% | 8% | 31% |
| ROKRockwell Automation, Inc. | $8.3B | 48% | 20.4% | 25% | 16% |
| ROPRoper Technologies Inc | $7.9B | 69% | 28.3% | 6% | 32% |
| AMEAmetek, Inc. | $7.4B | 36% | 25.8% | 13% | 23% |
| AAgilent Technologies, Inc. | $6.9B | 52% | 21.3% | 17% | 17% |
| KEYSKeysight Technologies, Inc. | $5.4B | 62% | 16.3% | 11% | 24% |
| MTDMettler-toledo International Inc. | $4.0B | 79% | 27.8% | 45% | 21% |
| WATWaters Corporation | $3.2B | 59% | 25.4% | 20% | 17% |