⚙️ KLA CORPORATION: ANALYSIS ⚙️
KLA Corporation [KLAC] designs, manufactures, and markets process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. KLAC offers integrated circuit (IC) manufacturing products that comprises wafer inspection and review, and metrology; wafer and substrate defect inspection and metrology; reticle defect inspection and metrology; chemical/materials quality analysis; in situ process management and wafer handling diagnostics for IC and original equipment manufacturer (OEM) manufacturing; software products to provide run-time process control, defect excursion identification, process corrections, and defect classification; and refurbished and remanufactured products.
In general terms, KLAC has showed incredible average margins: Gross margin ± 61%, Operative Margin ± 40% and Net Margin ± 34%. In addition, its average ROIC was ± 41.1% and the normalized EPS was ± $25.44. If an average PER of 16 is considered and their ROIC as an EPS volatility, the forward price spread could be at:
- Optimistic: ± $574 USD
- Neutral: ± $407 USD
- Pessimistic: ± $239 USD
In other hand, if a forward EV/EBITDA of 12 is considered with an EBITDA increases of 10%, Net Debt increases of 0% and Shares Outstanding increases of -2%, the neutral price could be ± $416 USD.
The pros: KLAC is present in 30 countries and has a wide range of products and services, it has lower net debt, it repurchases stocks, it has goods margins and ROIC, and it pays dividends. The cons: fear of a recession could depress the demand and it is a cyclical company. In the meantime, if KLAC wants to keep its metrics (ceteris paribus), their next EPS [31/06/23] should be ± $5.28 USD.
The best analysis is yours!
Copyright: Joel Padilla 2023
KLA Corporation [KLAC] designs, manufactures, and markets process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. KLAC offers integrated circuit (IC) manufacturing products that comprises wafer inspection and review, and metrology; wafer and substrate defect inspection and metrology; reticle defect inspection and metrology; chemical/materials quality analysis; in situ process management and wafer handling diagnostics for IC and original equipment manufacturer (OEM) manufacturing; software products to provide run-time process control, defect excursion identification, process corrections, and defect classification; and refurbished and remanufactured products.
In general terms, KLAC has showed incredible average margins: Gross margin ± 61%, Operative Margin ± 40% and Net Margin ± 34%. In addition, its average ROIC was ± 41.1% and the normalized EPS was ± $25.44. If an average PER of 16 is considered and their ROIC as an EPS volatility, the forward price spread could be at:
- Optimistic: ± $574 USD
- Neutral: ± $407 USD
- Pessimistic: ± $239 USD
In other hand, if a forward EV/EBITDA of 12 is considered with an EBITDA increases of 10%, Net Debt increases of 0% and Shares Outstanding increases of -2%, the neutral price could be ± $416 USD.
The pros: KLAC is present in 30 countries and has a wide range of products and services, it has lower net debt, it repurchases stocks, it has goods margins and ROIC, and it pays dividends. The cons: fear of a recession could depress the demand and it is a cyclical company. In the meantime, if KLAC wants to keep its metrics (ceteris paribus), their next EPS [31/06/23] should be ± $5.28 USD.
The best analysis is yours!
Copyright: Joel Padilla 2023
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