KLA CORP (NASDAQ:KLAC) – A Strong Growth Stock with Reasonable Valuation

KLA CORP (NASDAQ:KLAC) was identified as an affordable growth stock by our screening process. The company, a key player in semiconductor process control and yield management, demonstrates strong growth potential while maintaining reasonable valuation metrics. Below, we break down why KLAC fits the criteria for growth investors seeking balanced opportunities.

Growth Prospects

KLAC has shown impressive growth in recent years, with key highlights including:

• Earnings Per Share (EPS) growth of 35.37% over the past year, well above industry standards.
• A three-year average revenue growth rate of 16.52%, reflecting consistent demand for its semiconductor solutions.
• Expected future EPS growth of 14.32% annually, indicating sustained momentum.

While revenue growth is projected to slow slightly, the company’s strong historical performance and ongoing expansion in semiconductor manufacturing support its growth rating of 7 out of 10.

Valuation Assessment

Despite its growth trajectory, KLAC remains reasonably priced compared to peers:

• A P/E ratio of 27.15, slightly below the industry average of 37.72.
• A forward P/E of 24.63, in line with sector expectations.
• A PEG ratio that suggests the stock is fairly valued relative to its earnings growth.

The valuation rating of 5 reflects a balance between growth potential and current pricing, making it an attractive option for investors seeking growth without excessive premiums.

Profitability & Financial Health

KLAC excels in profitability, with a rating of 9 out of 10, driven by:

• A return on equity (ROE) of 92.27%, outperforming nearly all industry peers.
• Strong operating margins of 41.73%, indicating efficient operations.

Financial health is solid but has minor concerns, scoring 6 due to:

• A high debt-to-equity ratio (1.47), though manageable given strong cash flows.
• A current ratio of 2.54, ensuring short-term obligations are covered.

Conclusion

KLAC presents a compelling case as an affordable growth stock, combining strong earnings expansion, reasonable valuation, and high profitability. While its debt levels warrant monitoring, the company’s financial stability and industry position make it a noteworthy candidate for growth-focused portfolios.

For more details, review the full fundamental analysis of KLAC.

Our Affordable Growth screener lists additional stocks meeting these criteria and is updated regularly.

Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.