In today's world, most companies span several regions and sell around the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue came from abroad. Today, that makes up more than half of the S&P 500's growth.
And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at Agilent (NYSE: A ) . We'll examine not only where its sales and earnings come from, but also how its sales abroad have changed over time.
Where Agilent's sales were four years ago
Four years ago, Agilent produced 34% of its sales within the United States.
Source: S&P Capital IQ.
Where Agilent's sales are today
Today, America is still Agilent's largest market, but its influence is shrinking. While the United States still contributes 35% of sales, domestic sales growth lags far behind that for other regions.
Source: S&P Capital IQ.
|
Segment
|
4-Year Sales Growth
|
| United States |
4% |
| China |
82% |
| Japan |
(16%) |
| Rest of the World |
8% |
Source: S&P Capital IQ.
China has been a continuing bright spot for Agilent. When demand fell off a cliff in 2009, China fell along with other geographies, but the fall wasn't nearly as steep as seen in the Japanese market. More importantly, when the global economy rebounded and customers came back to Agilent in 2010, China rebounded more sharply than any other region.
China's effect isn't just being seen in end customer demand, either. While Agilent still maintains its central research in Santa Clara, Calif., it now sports a satellite office in Beijing as well. The company is aggressively luring not just more sales, but also talent from the emerging giant.
Competitor checkup
One last point to check is how Agilent's footprint compares with some of its peers.
|
Company
|
Geography With Most Sales
|
Percent of Sales
|
| Agilent |
United States |
35% |
| Finisar (Nasdaq: FNSR ) |
United States |
29%* |
| Edward Lifesciences (NYSE: EW ) |
International |
61% |
| Life Technologies (Nasdaq: LIFE ) |
United States |
39% |
Source: S&P Capital IQ.
*Excludes "rest of world" region.
Differences in terms of revenue contributions from each company's geographic regions largely boils down to reporting conventions of how each company groups its sales by geography. However, the important takeaway is that on the whole, across the test, measurement, and life sciences markets, the companies are extremely well geographically diversified and seeing tremendous growth from emerging markets -- especially in Asia.
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