KLA CORP (NASDAQ:KLAC) stands out as a growth opportunity that won't break the bank.

KLA CORP (NASDAQ:KLAC) has caught the eye of our stock screener as an affordable growth stock. KLAC is displaying robust growth metrics and also excels in terms of profitability, solvency, and liquidity. Additionally, it appears to be reasonably priced. Let's delve into the details.

What does the Growth looks like for KLAC

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. KLAC scores a 7 out of 10:

• The Earnings Per Share has grown by an impressive 20.18% over the past year.
• 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.
• The Revenue has been growing by 16.52% on average over the past years. This is quite good.
• The Earnings Per Share is expected to grow by 14.06% on average over the next years. This is quite good.
• The Revenue is expected to grow by 9.66% on average over the next years. This is quite good.

Valuation Examination for KLAC

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. KLAC boasts a 5 out of 10:

• Compared to the rest of the industry, the Price/Earnings ratio of KLAC indicates a somewhat cheap valuation: KLAC is cheaper than 62.96% of the companies listed in the same industry.
• 68.52% of the companies in the same industry are more expensive than KLAC, based on the Price/Forward Earnings ratio.
• Based on the Enterprise Value to EBITDA ratio, KLAC is valued a bit cheaper than the industry average as 64.81% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of KLAC indicates a somewhat cheap valuation: KLAC is cheaper than 71.30% of the companies listed in the same industry.
• KLAC's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• The excellent profitability rating of KLAC may justify a higher PE ratio.
• KLAC's earnings are expected to grow with 17.09% in the coming years. This may justify a more expensive valuation.

How We Gauge Health for KLAC

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For KLAC, the assigned 6 for health provides valuable insights:

• KLAC has an Altman-Z score of 6.83. This indicates that KLAC is financially healthy and has little risk of bankruptcy at the moment.
• KLAC's Altman-Z score of 6.83 is fine compared to the rest of the industry. KLAC outperforms 73.15% of its industry peers.
• 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.
• KLAC has a Debt to FCF ratio of 1.75. This is in the better half of the industry: KLAC outperforms 72.22% of its industry peers.
• Although KLAC does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
• 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.

Analyzing Profitability Metrics

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of KLAC, the assigned 9 is noteworthy for profitability:

• KLAC's Return On Assets of 21.39% is amongst the best of the industry. KLAC outperforms 94.44% of its industry peers.
• Looking at the Return On Equity, with a value of 89.51%, KLAC belongs to the top of the industry, outperforming 98.15% of the companies in the same industry.
• Looking at the Return On Invested Capital, with a value of 35.07%, KLAC belongs to the top of the industry, outperforming 98.15% of the companies in the same industry.
• KLAC had an Average Return On Invested Capital over the past 3 years of 33.80%. This is significantly above the industry average of 11.60%.
• 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.
• Looking at the Operating Margin, with a value of 39.92%, KLAC belongs to the top of the industry, outperforming 97.22% of the companies in the same industry.
• KLAC's Operating Margin has improved in the last couple of years.
• The Gross Margin of KLAC (61.37%) is better than 87.96% of its industry peers.

Every day, new Affordable Growth stocks can be found on ChartMill in our Affordable Growth screener.

Check the latest full fundamental report of KLAC for a complete fundamental analysis.

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.