KLACKLAC
US • TECHNOLOGY
$301.71
P/E
8.54
PEG
0.72
FCF Yield
1.2%
Rev Growth YoY
+11.5% YoY
Gross Margin
61.4%
Health Score
8/10
D/E Ratio
1.25
Confidence
MEDIUM
Business Snapshot
KLA Corporation (KLAC) is a leading supplier of process control and yield management systems for the semiconductor and related industries. Its products are integral to wafer manufacturing, helping chipmakers detect defects and improve yields during production. The company operates in the highly cyclical semiconductor equipment industry, where it holds a dominant competitive position as a market leader in optical and electron-beam inspection tools. With a market capitalisation of $324.79B, KLA is a large-cap company reporting TTM revenue of $13.10B, reflecting significant financial scale. A defining characteristic is its entrenched position within semiconductor fabrication, where switching costs are high and its equipment is considered critical for advanced node manufacturing.
Financial Health
KLA demonstrates solid profitability with a gross margin of 61.4% and a net margin of 35.7%, indicating strong pricing power and efficient cost management, though a prior-year comparison for gross margin is unavailable. The balance sheet is healthy, with a debt-to-equity ratio of 1.25x, which is manageable for a capital-intensive equipment maker, and a current ratio of 2.62x, signalling ample short-term liquidity...
Risk Assessment
- VALUATION — Price/Sales of 24.8x and Price/Book of 55.71x are extreme, implying the market discounts future growth heavily or that current earnings are unsustainably high.
- EARNINGS QUALITY — KLA beat estimates in only 3 of the last 4 quarters; while above average, it is not a perfect record, leaving some room for earnings surprises.
- INSIDER SELLING — Insiders have conducted 6 sales versus 0 buys over the last 90 days, a net-selling pattern that often signals caution about the current share price.
- DCF DIVERGENCE — The current price of $301.71 is far above the Python DCF estimate of $56.53, indicating a massive disconnect between market pricing and the model's intrinsic value, though model sensitivity is high.
- REVENUE SEASONALITY — No quarterly revenue data is available to assess the sequential growth rate, limiting the ability to detect a near-term deceleration.
- ANALYST PRICE TARGET — The average analyst price target of $204.39 implies a downside of -32.3% from the current price of $301.71, suggesting analysts view the stock as overvalued....
KLA demonstrates solid profitability with a gross margin of 61.4% and a net margin of 35.7%, indicating strong pricing power and efficient cost management, though a prior-year comparison for gross margin is unavailable. The balance sheet is healthy, with a debt-to-equity ratio of 1.25x, which is manageable for a capital-intensive equipment maker, and a current ratio of 2.62x, signalling ample short-term liquidity. Free cash flow is strongly positive at $3.97B, though the resulting FCF yield of 1.2% is modest relative to the current market capitalisation. Overall, the company possesses significant cash generation capability to fund reinvestment in R&D and maintain dividend payments, but the low FCF yield tempers the financial health score.
- VALUATION — Price/Sales of 24.8x and Price/Book of 55.71x are extreme, implying the market discounts future growth heavily or that current earnings are unsustainably high. - EARNINGS QUALITY — KLA beat estimates in only 3 of the last 4 quarters; while above average, it is not a perfect record, leaving some room for earnings surprises. - INSIDER SELLING — Insiders have conducted 6 sales versus 0 buys over the last 90 days, a net-selling pattern that often signals caution about the current share price. - DCF DIVERGENCE — The current price of $301.71 is far above the Python DCF estimate of $56.53, indicating a massive disconnect between market pricing and the model's intrinsic value, though model sensitivity is high. - REVENUE SEASONALITY — No quarterly revenue data is available to assess the sequential growth rate, limiting the ability to detect a near-term deceleration. - ANALYST PRICE TARGET — The average analyst price target of $204.39 implies a downside of -32.3% from the current price of $301.71, suggesting analysts view the stock as overvalued.
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