Last quarter, I opined that Agilent Technologies (NYSE: A) was making all the right moves. The maker of measurement instruments sold off one division to networker JDS Uniphase (Nasdaq: JDSU) and bought medical tester Varian, thus repositioning itself in the industry with potentially higher margins and growth opportunities to follow.

Here we are three months later, and it looks like I was right. The Varian acquisition and the network testing sale worked out to accelerated sales growth, and Agilent is absolutely crushing its old profit levels. Revenues shot up by 35% year over year to $1.6 billion, and non-GAAP earnings more than doubled to $0.65 per share.

And that's not all the good news:

  • Orders are flowing in faster than Agilent is filling and billing them, which gives the company great visibility into future trends.
  • Higher sales are great and all, but Agilent is also keeping a tight lid on expenses. That's not always easy to do while you're integrating a new acquisition into your business.
  • Return on invested capital (ROIC) expanded from 18% to 24%, which is a sign that management is squeezing more value out of its financial assets.
  • Free cash flow came in 44% stronger than net income. That's smart tax management, and also shows that Agilent has plenty of cash-producing muscle available. As most Fools would agree, cash is king. Agilent's cash king margin is now a healthy 10.9%, getting closer other equipment maker Thermo Fisher Scientific (NYSE: TMO) and leaving Beckman Coulter (NYSE: BEC) further behind.

According to CEO Bill Sullivan, this quarter saw "the completion of Agilent's transformation, a milestone in our company's history." The average investor appears to agree, as Agilent's stock has risen by 28% over the last three months.

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