On August 12, 2023, KLA Corp (KLAC, Financial) experienced a slight daily loss of -3.49%, despite an impressive 3-month gain of 24.33%. The company's Earnings Per Share (EPS) stood at 24.09. This article aims to answer the question: Is KLA Corp (KLAC) fairly valued? Read on for a comprehensive valuation analysis of the stock.
An Overview of KLA Corp (KLAC, Financial)
KLA Corp designs and manufactures yield-management and process-monitoring diagnostic and control systems for the semiconductor manufacturing industry. The company's products are used to analyze the manufacturing process at various steps in a semiconductor's development. KLA also provides inspection tools and systems for optical metrology and e-beam metrology.
The stock price of KLA (KLAC, Financial) stands at $478.98, which is very close to its Fair Value (GF Value) of $477.63. This suggests that the stock is fairly valued. KLA has a market capitalization of $65.50 billion and sales of $10.50 billion.
Understanding the GF Value of KLA Corp (KLAC, Financial)
The GF Value is a proprietary measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line indicates the stock's ideal fair trading value.
KLA's stock appears to be fairly valued according to the GuruFocus Value calculation. At its current price of $478.98 per share, KLA's future return is likely to be close to the rate of its business growth, given its fair valuation.
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Assessing KLA's Financial Strength
Investing in companies with poor financial strength can lead to a higher risk of permanent loss of capital. Thus, it's crucial to review a company's financial strength before deciding to invest. KLA's cash-to-debt ratio stands at 0.54, which is lower than 76.89% of companies in the Semiconductors industry. The company's overall financial strength is ranked 6 out of 10, indicating fair financial strength.
Profitability and Growth of KLA Corp
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. KLA has been profitable over the past 10 years, with high profitability margins. The company's operating margin is 38.06%, which ranks better than 96.47% of companies in the Semiconductors industry.
Growth is a crucial factor in the valuation of a company. KLA's 3-year average revenue growth rate is better than 80.85% of companies in the Semiconductors industry. Its 3-year average EBITDA growth rate is 40.6%, which ranks better than 72.86% of companies in the industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted average cost of capital (WACC) can provide insights into its profitability. For the past 12 months, KLA's ROIC is 37.17, and its WACC is 11.93.
Conclusion
In conclusion, the stock of KLA Corp (KLAC, Financial) appears to be fairly valued. The company's financial condition is fair, and its profitability is strong. Its growth ranks better than 72.86% of companies in the Semiconductors industry. To learn more about KLA stock, check out its 30-Year Financials here.
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