NasdaqGS:KLAC

Stock Analysis Report

Executive Summary

KLA Corporation designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries worldwide.

Rewards

Trading at 12.4% below its fair value

Earnings are forecast to grow 14.67% per year

Earnings grew by 22.8% over the past year

Pays a high and reliable dividend of 2.11%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Solid track record established dividend payer.


Similar Companies

Onto Innovation

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Share Price & News

How has KLA's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: KLAC has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.1%

KLAC

1.0%

US Semiconductor

0.7%

US Market


1 Year Return

74.3%

KLAC

37.5%

US Semiconductor

18.2%

US Market

Return vs Industry: KLAC exceeded the US Semiconductor industry which returned 37.5% over the past year.

Return vs Market: KLAC exceeded the US Market which returned 18.2% over the past year.


Shareholder returns

KLACIndustryMarket
7 Day-0.1%1.0%0.7%
30 Day-7.7%-1.4%1.5%
90 Day8.2%6.9%5.0%
1 Year78.6%74.3%40.3%37.5%20.8%18.2%
3 Year124.4%108.1%82.1%71.8%45.2%35.8%
5 Year174.7%138.8%135.3%112.1%71.6%52.7%

Price Volatility Vs. Market

How volatile is KLA's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is KLA undervalued compared to its fair value and its price relative to the market?

12.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: KLAC ($160.88) is trading below our estimate of fair value ($183.59)

Significantly Below Fair Value: KLAC is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: KLAC is good value based on its PE Ratio (22.4x) compared to the Semiconductor industry average (30.4x).

PE vs Market: KLAC is poor value based on its PE Ratio (22.4x) compared to the US market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: KLAC is poor value based on its PEG Ratio (1.5x)


Price to Book Ratio

PB vs Industry: KLAC is overvalued based on its PB Ratio (9.6x) compared to the US Semiconductor industry average (2.9x).


Next Steps

Future Growth

How is KLA forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

14.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: KLAC's forecast earnings growth (14.7% per year) is above the savings rate (1.7%).

Earnings vs Market: KLAC's earnings (14.7% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: KLAC's earnings are forecast to grow, but not significantly.

Revenue vs Market: KLAC's revenue (5.9% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: KLAC's revenue (5.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: KLAC's Return on Equity is forecast to be very high in 3 years time (55.9%).


Next Steps

Past Performance

How has KLA performed over the past 5 years?

21.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: KLAC has high quality earnings.

Growing Profit Margin: KLAC's current net profit margins (23%) are higher than last year (22%).


Past Earnings Growth Analysis

Earnings Trend: KLAC's earnings have grown significantly by 21.8% per year over the past 5 years.

Accelerating Growth: KLAC's earnings growth over the past year (22.8%) exceeds its 5-year average (21.8% per year).

Earnings vs Industry: KLAC earnings growth over the past year (22.8%) exceeded the Semiconductor industry -15.8%.


Return on Equity

High ROE: Whilst KLAC's Return on Equity (42%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is KLA's financial position?


Financial Position Analysis

Short Term Liabilities: KLAC's short term assets ($4.4B) exceed its short term liabilities ($1.9B).

Long Term Liabilities: KLAC's short term assets ($4.4B) do not cover its long term liabilities ($4.6B).


Debt to Equity History and Analysis

Debt Level: KLAC's debt to equity ratio (127.8%) is considered high.

Reducing Debt: KLAC's debt to equity ratio has increased from 22.2% to 127.8% over the past 5 years.

Debt Coverage: KLAC's debt is well covered by operating cash flow (37%).

Interest Coverage: KLAC's interest payments on its debt are well covered by EBIT (13.8x coverage).


Balance Sheet

Inventory Level: KLAC has a low level of unsold assets or inventory.

Debt Coverage by Assets: KLAC's debt is covered by short term assets (assets are 1.3x debt).


Next Steps

Dividend

What is KLA's current dividend yield, its reliability and sustainability?

2.11%

Current Dividend Yield


Dividend Yield vs Market

company2.1%marketbottom25%1.4%markettop25%3.7%industryaverage2.0%forecastin3Years2.2%

Current dividend yield vs market & industry

Notable Dividend: KLAC's dividend (2.11%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: KLAC's dividend (2.11%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

Stable Dividend: KLAC's dividends per share have been stable in the past 10 years.

Growing Dividend: KLAC's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (41.8%), KLAC's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: KLAC's dividends in 3 years are forecast to be well covered by earnings (32.7% payout ratio).


Next Steps

Management

What is the CEO of KLA's salary, the management and board of directors tenure and is there insider trading?

5.5yrs

Average management tenure


CEO

Rick Wallace (59yo)

13.9yrs

Tenure

US$20,512,367

Compensation

Mr. Richard P. Wallace, also known as Rick, serves as Independent Director for Proofpoint, Inc., a security and compliance company. Mr. Richard P. Wallace, also known as Rick, has been the Chief Executive  ...


CEO Compensation Analysis

Compensation vs Market: Rick's total compensation ($USD20.51M) is above average for companies of similar size in the US market ($USD10.90M).

Compensation vs Earnings: Rick's compensation has increased by more than 20% in the past year.


Management Age and Tenure

5.5yrs

Average Tenure

56yo

Average Age

Experienced Management: KLAC's management team is seasoned and experienced (5.5 years average tenure).


Board Age and Tenure

12.1yrs

Average Tenure

62.5yo

Average Age

Experienced Board: KLAC's board of directors are seasoned and experienced ( 12.1 years average tenure).


Insider Trading

Insider Buying: KLAC insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$787,50012 Nov 19
Amichai Steimberg
EntityIndividual
Role
Unit CEO
Chief Executive Officer of Orbotech Ltd.
Shares4,500
Max PriceUS$175.00
SellUS$375,00005 Sep 19
Amichai Steimberg
EntityIndividual
Role
Unit CEO
Chief Executive Officer of Orbotech Ltd.
Shares2,500
Max PriceUS$150.00
SellUS$1,243,90620 Aug 19
Amichai Steimberg
EntityIndividual
Role
Unit CEO
Chief Executive Officer of Orbotech Ltd.
Shares8,962
Max PriceUS$140.00
SellUS$165,56315 May 19
Teri Little
EntityIndividual
Role
Chief Legal Officer
Executive VP
Shares1,500
Max PriceUS$110.38
SellUS$251,41814 Mar 19
Emiko Higashi
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,141
Max PriceUS$117.43

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Rick Wallace (59yo)

    President

    • Tenure: 13.9yrs
    • Compensation: US$20.51m
  • Virendra Kirloskar (56yo)

    Senior VP & Chief Accounting Officer

    • Tenure: 11.8yrs
    • Compensation: US$1.31m
  • Amichai Steimberg (57yo)

    Chief Executive Officer of Orbotech Ltd.

    • Tenure: 0.8yrs
    • Compensation: US$8.07m
  • Benjamin Tsai (60yo)

    CTO & Executive VP of Corporate Alliances

    • Tenure: 25.9yrs
    • Compensation: US$1.88m
  • Brian Trafas (56yo)

    Executive Vice President of Global Customer Organization

    • Tenure: 4.7yrs
    • Compensation: US$5.60m
  • Kevin M. Kessel

    Vice President of Investor Relations

    • Tenure: 0yrs
  • Ted Lockwood

    Senior Director of Investor Relations

    • Tenure: 0yrs
  • Bren Higgins (49yo)

    Executive VP & CFO

    • Tenure: 6.3yrs
    • Compensation: US$6.91m
  • Ahmad Khan (45yo)

    President of Semiconductor Process Control

    • Tenure: 4.3yrs
    • Compensation: US$7.45m
  • Teri Little (55yo)

    Executive VP

    • Tenure: 2.3yrs
    • Compensation: US$1.84m

Board Members

  • Ned Barnholt (75yo)

    Non-Executive Chairman

    • Tenure: 13.2yrs
    • Compensation: US$436.82k
  • Ken Levy (75yo)

    Founder & Chairman Emeritus

    • Tenure: 13.2yrs
    • Compensation: US$356.35k
  • Rick Wallace (59yo)

    President

    • Tenure: 13.9yrs
    • Compensation: US$20.51m
  • Bob Calderoni (59yo)

    Independent Director

    • Tenure: 12.8yrs
    • Compensation: US$347.57k
  • Emiko Higashi (61yo)

    Independent Director

    • Tenure: 9.1yrs
    • Compensation: US$310.07k
  • Kevin Kennedy (64yo)

    Independent Director

    • Tenure: 12.6yrs
    • Compensation: US$327.57k
  • Victor Peng (59yo)

    Independent Director

    • Tenure: 0.8yrs
    • Compensation: US$204.60k
  • Kiran Patel (71yo)

    Independent Director

    • Tenure: 11.6yrs
    • Compensation: US$317.57k
  • Bob Rango (61yo)

    Independent Director

    • Tenure: 5.9yrs
    • Compensation: US$307.57k
  • Gary Moore (70yo)

    Independent Director

    • Tenure: 5.9yrs
    • Compensation: US$307.57k

Company Information

KLA Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: KLA Corporation
  • Ticker: KLAC
  • Exchange: NasdaqGS
  • Founded: 1975
  • Industry: Semiconductor Equipment
  • Sector: Semiconductors
  • Market Cap: US$25.386b
  • Shares outstanding: 157.79m
  • Website: https://www.kla.com

Number of Employees


Location

  • KLA Corporation
  • One Technology Drive
  • Milpitas
  • California
  • 95035
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
KLACNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDOct 1980
KLADB (Deutsche Boerse AG)YesCommon StockDEEUROct 1980
0JPOLSE (London Stock Exchange)YesCommon StockGBUSDOct 1980
KLACWBAG (Wiener Boerse AG)YesCommon StockATEUROct 1980
KLAETLX (Eurotlx)YesCommon StockITEUROct 1980
KLAC *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNOct 1980

Biography

KLA Corporation designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries worldwide. The company offers chip and wafer m ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/09 23:37
End of Day Share Price2019/12/09 00:00
Earnings2019/09/30
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.