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KLA (KLAC)
NASDAQ:KLAC
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KLA
(NASDAQ:KLAC)69Neutral
Positive Factors
Earnings
KLA reported a strong beat-and-raise quarter and conservatively guided a $3B/qtr revenue run-rate through CY25, which represents 11% total revenue growth.
Market Share
KLAC sees a return of leading-edge logic driving up process control intensity, which will expand its WFE share in CY25.
Negative Factors
China Revenue Decline
KLAC management reiterated that China revenue could decline by low-20s percent in CY25, and the China revenue contribution will fall from 41% in CY24 to 29% in CY25.
KLA (KLAC) vs. S&P 500 (SPY)
Market Cap
$92.89B
Dividend Yield0.9%
Average Volume (3M)1.10M
Price to Earnings (P/E)29.4
Beta (1Y)1.83
Revenue Growth12.19%
EPS Growth20.80%
CountryUS
Employees15,000
SectorTechnology
Sector Strength48
IndustrySemiconductors and Equipment
Share Statistics
EPS (TTM)23.78
Shares Outstanding132,886,750
10 Day Avg. Volume1,114,059
30 Day Avg. Volume1,097,728
Financial Highlights & Ratios
PEG Ratio1.41
Price to Book (P/B)N/A
Price to Sales (P/S)8.47
Price to Cash Flow (P/CF)27.00
P/FCF Ratio27.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$834.05Price Target Upside16.52% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering20
KLA Business Overview & Revenue Model
Company DescriptionKLA Corp. is a California-based company, which is engaged in the supply of process control and yield management solutions for the semiconductor and related nano-electronics industries. Its products include manufactured chips, reticle, packaging, surface profilers, nanochemical testers, compound semiconductors and wafer processing solutions.
How the Company Makes MoneyKLA Corporation generates revenue primarily through the sale of its high-performance inspection and metrology systems, as well as software solutions that are critical in the semiconductor manufacturing process. The company earns money by providing these cutting-edge tools to semiconductor manufacturers who require precision and efficiency in their production processes. Additionally, KLA offers maintenance, support, and consulting services, which provide a steady stream of recurring revenue. The company's earnings are significantly influenced by the ongoing demand for semiconductor devices, driven by technological advancements and the proliferation of electronics in various industries. KLA also benefits from strategic partnerships and collaborations with major semiconductor manufacturers and research institutions, which help drive innovation and adoption of its solutions.
KLA Financial Statement Overview
Summary
KLA's financial performance is robust, with strong profitability and efficient cash generation. The balance sheet is solid, though slightly reliant on debt. Overall, KLA is financially sound with impressive revenue and income growth.Income Statement
KLA demonstrates strong profitability with a consistent gross profit margin and a solid net profit margin. The revenue growth is robust over the years, indicating strong market demand and operational efficiency. EBIT and EBITDA margins also remain high, showcasing effective cost management.92
Very Positive
Balance Sheet
The balance sheet reflects a moderate debt-to-equity ratio, indicating manageable leverage levels. Return on Equity (ROE) is impressive, highlighting effective use of equity capital. However, the equity ratio is somewhat low, suggesting a reliance on debt financing.75
Positive
Cash Flow
Cash flow statements reveal strong operating cash flows and a positive free cash flow trajectory. The operating cash flow to net income ratio is healthy, indicating efficient cash generation relative to earnings. Free cash flow growth is robust, supporting future investments and debt servicing.88
Very Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 10.84B | 9.81B | 10.50B | 9.21B | 6.92B | 5.81B | Gross Profit |
| 6.53B | 5.88B | 6.28B | 5.62B | 4.15B | 3.36B | EBIT |
| 4.26B | 3.64B | 3.99B | 3.65B | 2.52B | 1.76B | EBITDA |
| 4.52B | 3.91B | 4.41B | 4.01B | 2.85B | 2.10B | Net Income Common Stockholders |
| 3.21B | 2.76B | 3.39B | 3.32B | 2.08B | 1.22B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.78B | 4.50B | 3.24B | 2.71B | 2.49B | 1.98B | Total Assets |
| 15.00B | 15.43B | 14.07B | 12.60B | 10.27B | 9.28B | Total Debt |
| 6.07B | 6.82B | 5.89B | 6.66B | 3.44B | 3.47B | Net Debt |
| 4.23B | 4.84B | 3.96B | 5.08B | 2.01B | 1.49B | Total Liabilities |
| 11.42B | 12.07B | 11.15B | 11.20B | 6.90B | 6.60B | Stockholders Equity |
| 3.58B | 3.37B | 2.92B | 1.40B | 3.38B | 2.67B |
| Cash Flow | Free Cash Flow | ||||
| 3.36B | 3.03B | 3.33B | 3.01B | 1.95B | 1.63B | Operating Cash Flow |
| 3.65B | 3.31B | 3.67B | 3.31B | 2.19B | 1.78B | Investing Cash Flow |
| -554.17M | -1.48B | -486.87M | -876.46M | -500.40M | -258.87M | Financing Cash Flow |
| -2.90B | -1.78B | -2.83B | -2.26B | -1.50B | -1.30B |
KLA Technical Analysis
Neutral
715.81
Price Trends
713.17
Positive
690.17
Positive
735.91
Negative
Market Momentum
-4.71
Positive
46.84
Neutral
19.34
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KLAC, the sentiment is Neutral. The current price of 715.81 is below the 20-day moving average (MA) of 740.19, above the 50-day MA of 713.17, and below the 200-day MA of 735.91, indicating a neutral trend. The MACD of -4.71 indicates Positive momentum. The RSI at 46.84 is Neutral, neither overbought nor oversold. The STOCH value of 19.34 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KLAC.
KLA Risk Analysis
KLA disclosed 38 risk factors in its most recent earnings report. KLA reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
KLA Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $98.12B | 23.23 | 48.75% | 1.13% | 13.21% | 27.25% | |
77 Outperform | $271.75B | 34.01 | 40.98% | 0.81% | 2.53% | -3.33% | |
76 Outperform | $124.20B | 20.00 | 34.06% | 1.05% | 4.45% | -10.01% | |
70 Outperform | $17.34B | 32.29 | 14.62% | 0.45% | 5.52% | 16.59% | |
70 Outperform | $6.67B | 33.34 | 10.47% | ― | 21.01% | 65.27% | |
69 Neutral | $92.89B | 29.40 | 89.51% | 0.90% | 12.19% | 20.80% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
KLAC
KLA
715.81
6.68
0.94%
AMAT
Applied Materials
155.32
-55.08
-26.18%
ASML
ASML Holding
739.75
-257.05
-25.79%
LRCX
Lam Research
79.05
-17.85
-18.42%
ONTO
Onto Innovation
140.17
-50.13
-26.34%
TER
Teradyne
110.21
3.89
3.66%
KLA Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -3.37% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
KLA reported strong revenue growth, profitability, and cash flow for 2024, with notable achievements in advanced packaging and services. However, the company faces challenges due to U.S. export controls impacting China revenue and the completion of flat panel business shipments. Despite these challenges, KLA provided solid guidance for 2025, demonstrating resilience and market leadership.Highlights
Record Revenue and Market Growth
KLA's 2024 revenue grew 12% to a record $10.85 billion. Process control revenue grew over 12%, indicating increased market share, while the services business grew 15% to $2.5 billion.
Strong Profitability and Cash Flow
KLA maintained industry-leading gross and operating margins at 61% and 41%, respectively. The company grew free cash flow to $3.4 billion and returned $2.9 billion to shareholders through dividends and share buybacks.
Advanced Packaging Growth
KLA's advanced packaging revenue grew to approximately $500 million in 2024 and is expected to exceed $800 million in 2025, up from the previous estimate of $750 million.
Services Business Milestone
KLA's service business grew to $667 million in the December quarter, marking 50 consecutive quarters of growth, with an 18% year-over-year increase.
Solid Guidance for 2025
Total revenue for the March quarter is expected to be $3 billion, up 27% year-over-year at the midpoint. Non-GAAP gross margin is forecasted to be 62%, and non-GAAP diluted EPS guidance is $8.05 plus or minus $0.60.
Lowlights
Impact of U.S. Export Controls on China
The recent U.S. government export controls are expected to impact KLA's revenue in 2025 by approximately $500 million, with roughly 70% of the impact affecting the systems business.
Flat Panel Business Exit
KLA will complete the shipment of systems for its flat panel business by the end of the current quarter, affecting growth in the EPC segment.
Potential Licensing Delays
There are significant delays in processing licensing requests by the U.S. government, which may affect KLA's ability to mitigate the revenue impact from export controls.
Company Guidance
During the KLA Corporation December Quarter 2024 Earnings Conference Call, the company provided guidance for the fiscal year 2025, highlighting several key metrics. Revenue for the December quarter reached $3.08 billion, surpassing the midpoint of their guidance, and non-GAAP diluted EPS was $8.20 with a GAAP diluted EPS of $6.16. The company's gross margin was reported at 61.7%, and operating expenses totaled $596 million, comprising $342 million in R&D and $254 million in SG&A. KLA's free cash flow for the quarter was $757 million, with a free cash flow margin of 31%. Looking ahead, KLA expects the WFE market to grow by a mid-single-digit percentage in 2025, driven by investments in leading-edge logic and high-bandwidth memory, despite a $500 million revenue impact from recent export controls in China. Their March quarter guidance includes a total revenue forecast of $3 billion, plus or minus $150 million, and a non-GAAP gross margin of 62%, plus or minus 1 percentage point. Throughout 2025, KLA plans to maintain significant product development investments to support anticipated revenue growth, with operating expenses projected to increase by approximately $15 million incrementally per quarter.KLA Corporate Events
Business Operations and StrategyFinancial DisclosuresRegulatory Filings and Compliance
KLA Maintains Guidance Amid New U.S. Export Rules
Neutral
Dec 3, 2024
The U.S. Department of Commerce has introduced new rules that could impact semiconductor equipment sales to China, prompting companies to review their business strategies. Despite potential challenges, one company is maintaining its financial guidance for the December 2024 quarter and plans to discuss the broader implications of these rules at upcoming investor conferences.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.