KLA Corporation Fundamental Analysis (NASDAQ: KLAC)
KLA Corporation (NASDAQ: KLAC) shows strong financial fundamentals with a PE ratio of 49.26, profit margin of 35.57%, and ROE of 85.38%. The company generates $13.5B in annual revenue with strong year-over-year growth of 23.89%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 80.0/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze KLAC's fundamental strength across five key dimensions:
Efficiency Score
ExcellentKLAC demonstrates superior asset utilization.
Valuation Score
WeakKLAC trades at a premium to fair value.
Growth Score
ExcellentKLAC delivers strong and consistent growth momentum.
Financial Health Score
ExcellentKLAC maintains a strong and stable balance sheet.
Profitability Score
ExcellentKLAC achieves industry-leading margins.
Key Financial Metrics
Is KLAC Expensive or Cheap?
P/E Ratio
KLAC trades at 49.26 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, KLAC's PEG of 2.43 indicates potential overvaluation.
Price to Book
The market values KLA Corporation at 37.48 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 40.42 times EBITDA. This signals the market has high growth expectations.
How Well Does KLAC Make Money?
Net Profit Margin
For every $100 in sales, KLA Corporation keeps $35.57 as profit after all expenses.
Operating Margin
Core operations generate 41.69 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $85.38 in profit for every $100 of shareholder equity.
ROA
KLA Corporation generates $26.91 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
KLA Corporation generates strong operating cash flow of $4.13B, reflecting robust business health.
Free Cash Flow
KLA Corporation generates strong free cash flow of $3.75B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.87 in free cash annually.
FCF Yield
KLAC converts 1.58% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
49.26
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
2.43
vs 25 benchmark
P/B Ratio
Price to book value ratio
37.48
vs 25 benchmark
P/S Ratio
Price to sales ratio
17.46
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.93
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.88
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.85
vs 25 benchmark
ROA
Return on assets percentage
0.27
vs 25 benchmark
ROCE
Return on capital employed
0.41
vs 25 benchmark
How KLAC Stacks Against Its Sector Peers
| Metric | KLAC Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 49.26 | 35.65 | Worse (Expensive) |
| ROE | 85.38% | 651.00% | Weak |
| Net Margin | 35.57% | -138740.00% (disorted) | Strong |
| Debt/Equity | 0.93 | 0.26 | Weak (High Leverage) |
| Current Ratio | 2.88 | 5.96 | Strong Liquidity |
| ROA | 26.91% | 227.00% | Weak |
KLAC outperforms its industry in 2 out of 6 key metrics, particularly excelling in Net Margin, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews KLA Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
146.76%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
293.44%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
170.47%
Industry Style: Growth, Innovation, High Beta
High Growth