Now trading at a price of $497.24, KLA has moved -0.5% so far today.
KLA returned gains of 48.0% last year, with its stock price reaching a high of $520.19 and a low of $328.43. Over the same period, the stock outperformed the S&P 500 index by 32.0%. More recently, the company's 50-day average price was $474.33. KLA Corporation designs, manufactures, and markets process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. Based in Milpitas, CA, the large-cap Technology company has 15,000 full time employees. KLA has offered a 1.0% dividend yield over the last 12 months.
Growing Revenues With Increasing Reinvestment in the Business:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $4,037 | $4,569 | $5,806 | $6,919 | $9,212 | $10,496 |
| Gross Margins | 64% | 59% | 57% | 60% | 61% | 60% |
| Operating Margins | 36.0% | 28.0% | 23.0% | 34.0% | 38.0% | 36.0% |
| Net Margins | 20.0% | 26.0% | 21.0% | 30.0% | 36.0% | 32.0% |
| Net Income (MM) | $802 | $1,176 | $1,217 | $2,078 | $3,322 | $3,387 |
| Net Interest Expense (MM) | $114 | $125 | $160 | $157 | $160 | $297 |
| Depreciation & Amort. (MM) | $63 | $233 | $348 | $333 | $363 | $415 |
| Earnings Per Share | $5.1 | $7.49 | $7.7 | $13.37 | $21.92 | $24.15 |
| Diluted Shares (MM) | 157 | 157 | 158 | 155 | 152 | 140 |
| Free Cash Flow (MM) | $1,162 | $1,022 | $1,626 | $1,953 | $3,005 | $3,328 |
| Capital Expenditures (MM) | $67 | $130 | $153 | $232 | $307 | $342 |
| Net Current Assets (MM) | $478 | -$2,185 | -$1,641 | -$932 | -$2,993 | -$2,781 |
| Long Term Debt (MM) | $1,988 | $3,400 | $3,441 | $3,424 | $6,114 | $5,891 |
| Net Debt / EBITDA | 0.29 | 1.61 | 1.21 | 0.66 | 1.18 | 0.94 |
KLA has growing revenues and increasing reinvestment in the business, exceptional EPS growth, and a pattern of improving cash flows. The company also benefits from low leverage, wider gross margins than its peer group, and decent operating margins with a stable trend.
KLA's Valuation Is in Line With Its Sector Averages:
KLA has a trailing twelve month P/E ratio of 21.2, compared to an average of 27.16 for the Technology sector. Based on its EPS guidance of $26.06, the company has a forward P/E ratio of 18.2. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 29.6%. On this basis, KLA's PEG ratio is 0.72. Using instead the 10.8% weighted average of KLA's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 1.97, which suggests that its shares may be overpriced. Furthermore, KLA is likely overvalued compared to the book value of its equity, since its P/B ratio of 22.61 is higher than the sector average of 6.23. The company's shares are currently trading 366.2% above their Graham number. Ultimately, KLA's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
Analysts Give KLA an Average Rating of Buy:
The 18 analysts following KLA have set target prices ranging from $319.0 to $600.0 per share, for an average of $529.89 with a buy rating. As of April 2023, the company is trading -10.5% away from its average target price, indicating that there is an analyst consensus of some upside potential.
KLA has a very low short interest because 1.9% of the company's shares are sold short. Institutions own 91.8% of the company's shares, and the insider ownership rate stands at 0.23%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $6,434,270,556.
