Today we're going to take a look at the well-established KLA Corporation (NASDAQ:KLAC). The company's stock saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the companyâs outlook is already priced into the stock. But what if there is still an opportunity to buy? Letâs take a look at KLAâs outlook and value based on the most recent financial data to see if the opportunity still exists.
See our latest analysis for KLA
What's The Opportunity In KLA?
The stock seems fairly valued at the moment according to my valuation model. Itâs trading around 13.70% above my intrinsic value, which means if you buy KLA today, youâd be paying a relatively reasonable price for it. And if you believe the companyâs true value is $365.84, then there isnât really any room for the share price grow beyond what itâs currently trading. Is there another opportunity to buy low in the future? Since KLAâs share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What does the future of KLA look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that itâs the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of KLA, it is expected to deliver a relatively unexciting earnings growth of 5.4%, which doesnât help build up its investment thesis. Growth doesnât appear to be a main reason for a buy decision for the company, at least in the near term.
What This Means For You
Are you a shareholder? It seems like the market has already priced in KLACâs future outlook, with shares trading around its fair value. However, there are also other important factors which we havenât considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If youâve been keeping tabs on KLAC, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means itâs worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
So while earnings quality is important, it's equally important to consider the risks facing KLA at this point in time. Case in point: We've spotted 2 warning signs for KLA you should be aware of.
If you are no longer interested in KLA, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NasdaqGS:KLAC
KLA
Engages in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide.
Adequate balance sheet with moderate growth potential.