DCF Studio

    KEYS · NYQ · Technology

    Keysight Technologies, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 133.45

    Market price

    USD 298.94

    Implied upside

    -55.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-10-31

    Current EV/EBITDA of 45.0x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 133.45-55.4%
    Exit multiple
    USD 241.55-19.2%
    Market price
    USD 298.94

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 7.1bnUSD 8.2bnUSD 9.3bnUSD 10.5bnUSD 11.6bnUSD 12.6bnUSD 13.5bnUSD 14.3bnUSD 14.9bnUSD 15.3bn+8.9%
    EBITUSD 1.5bnUSD 1.7bnUSD 1.9bnUSD 2.2bnUSD 2.4bnUSD 2.6bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.2bn+8.9%
    NOPATUSD 1.2bnUSD 1.3bnUSD 1.5bnUSD 1.7bnUSD 1.9bnUSD 2.1bnUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.5bn+8.9%
    Add depreciation & amortisationUSD 330.0mUSD 380.8mUSD 433.2mUSD 485.9mUSD 537.2mUSD 585.3mUSD 628.2mUSD 664.1mUSD 691.4mUSD 708.7m+8.9%
    Less capital expenditureUSD -222.2mUSD -280.7mUSD -347.1mUSD -420.4mUSD -499.1mUSD -581.1mUSD -663.8mUSD -744.2mUSD -819.0mUSD -884.7m+16.6%
    Capex, % of revenue3.1%3.4%3.7%4.0%4.3%4.6%4.9%5.2%5.5%5.8%-
    Less increase in working capitalUSD -519.2mUSD -326.6mUSD -337.4mUSD -339.0mUSD -329.9mUSD -309.0mUSD -276.0mUSD -231.2mUSD -175.6mUSD -111.2m-15.7%
    Free cashflow to firmUSD 749.4mUSD 1.1bnUSD 1.3bnUSD 1.4bnUSD 1.6bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.1bnUSD 2.2bn+12.7%
    Discount factor0.95590.87360.79830.72950.66660.60920.55670.50870.46490.4248-
    Present valueUSD 716.4mUSD 972.1mUSD 1.0bnUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.0bnUSD 989.6mUSD 936.9m-
    Present Value Of The ForecastUSD 9.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.140Reported 1.209, pulled toward 1.0 (Blume)
    Cost of equity9.72%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 9.1x interest cover. Book interest / average debt was lower, at 4.0%.
    Market capitalisationUSD 50.9bn94.8% of capital
    Total debtUSD 2.8bn5.2% of capital, book value as a proxy
    Tax rate20.9%Effective, capped at statutory
    WACC9.43%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 133.45

    59% of EV

    Forecast FCFF, final year
    USD 2.2bn
    Capex at depreciation, working capital in reinvestment
    USD 2.8bn
    Less reinvestment at g/ROIC (19.1% of NOPAT)
    USD -528.6m
    Capitalised
    USD 2.2bn
    ROIC (reported)
    13.1%
    Terminal value, undiscounted
    USD 33.2bn
    Terminal value, discounted
    USD 14.1bn
    Enterprise value
    USD 24.0bn
    Less net debt
    USD 905.0m
    Equity value
    USD 23.1bn

    Exit at 20.0x EBITDA

    Value per shareUSD 241.55

    77% of EV

    Terminal value, undiscounted
    USD 77.2bn
    Terminal value, discounted
    USD 32.8bn
    Enterprise value
    USD 42.7bn
    Less net debt
    USD 905.0m
    Equity value
    USD 41.8bn

    Spread between methods: 58%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.43%183.91188.44194.17201.48210.99
    8.43%154.14156.11158.63161.84165.96
    9.43%132.01132.60133.45134.61136.17
    10.43%114.95114.77114.70114.78115.03
    11.43%101.41100.79100.2299.7099.25

    Outlined: this model. Green text: above today's price of 298.94. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-0.3%11.0%21.8%
    EBIT margin24.9%20.6%45.8%
    Discount rate-9.4%5.8%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.