KLA CORP (NASDAQ:KLAC) is not too expensive for the growth it is showing.

Our stock screener has singled out KLA CORP (NASDAQ:KLAC) as an attractive growth opportunity. KLAC is demonstrating remarkable growth potential while maintaining strong financial indicators, making it a reasonably priced option. We'll explore this further.

Growth Examination for KLAC

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. KLAC has earned a 7 for growth:

• KLAC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.18%, which is quite impressive.
• The Earnings Per Share has been growing by 22.88% on average over the past years. This is a very strong growth
• The Revenue has grown by 12.15% in the past year. This is quite good.
• Measured over the past years, KLAC shows a quite strong growth in Revenue. The Revenue has been growing by 16.52% on average per year.
• Based on estimates for the next years, KLAC will show a quite strong growth in Earnings Per Share. The EPS will grow by 14.06% on average per year.
• Based on estimates for the next years, KLAC will show a quite strong growth in Revenue. The Revenue will grow by 9.66% on average per year.

Valuation Assessment of KLAC

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. KLAC scores a 5 out of 10:

• Based on the Price/Earnings ratio, KLAC is valued a bit cheaper than the industry average as 69.44% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Forward Earnings ratio of KLAC indicates a somewhat cheap valuation: KLAC is cheaper than 72.22% of the companies listed in the same industry.
• 66.67% of the companies in the same industry are more expensive than KLAC, based on the Enterprise Value to EBITDA ratio.
• 79.63% of the companies in the same industry are more expensive than KLAC, based on the Price/Free Cash Flow ratio.
• KLAC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• KLAC has an outstanding profitability rating, which may justify a higher PE ratio.
• KLAC's earnings are expected to grow with 17.20% in the coming years. This may justify a more expensive valuation.

Evaluating Health: KLAC

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. KLAC was assigned a score of 6 for health:

• KLAC has an Altman-Z score of 7.26. This indicates that KLAC is financially healthy and has little risk of bankruptcy at the moment.
• With a decent Altman-Z score value of 7.26, KLAC is doing good in the industry, outperforming 70.37% of the companies in the same industry.
• KLAC has a debt to FCF ratio of 1.75. This is a very positive value and a sign of high solvency as it would only need 1.75 years to pay back of all of its debts.
• With a decent Debt to FCF ratio value of 1.75, KLAC is doing good in the industry, outperforming 72.22% of the companies in the same industry.
• Even though the debt/equity ratio score it not favorable for KLAC, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
• KLAC has a Current Ratio of 2.36. This indicates that KLAC is financially healthy and has no problem in meeting its short term obligations.

Profitability Insights: KLAC

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. KLAC was assigned a score of 9 for profitability:

• The Return On Assets of KLAC (21.39%) is better than 94.44% of its industry peers.
• With an excellent Return On Equity value of 89.51%, KLAC belongs to the best of the industry, outperforming 98.15% of the companies in the same industry.
• KLAC has a Return On Invested Capital of 35.07%. This is amongst the best in the industry. KLAC outperforms 98.15% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for KLAC is significantly above the industry average of 11.35%.
• The last Return On Invested Capital (35.07%) for KLAC is above the 3 year average (33.80%), which is a sign of increasing profitability.
• KLAC has a better Profit Margin (29.58%) than 90.74% of its industry peers.
• In the last couple of years the Profit Margin of KLAC has grown nicely.
• KLAC's Operating Margin of 39.92% is amongst the best of the industry. KLAC outperforms 97.22% of its industry peers.
• KLAC's Operating Margin has improved in the last couple of years.
• The Gross Margin of KLAC (61.37%) is better than 87.04% of its industry peers.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

Our latest full fundamental report of KLAC contains the most current fundamental analsysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.