KLA CORP (NASDAQ:KLAC) – A Strong Candidate for Quality Investors

Last update: Jun 18, 2025

KLA CORP (NASDAQ:KLAC) stands out as a compelling pick for quality investors, based on our Caviar Cruise screening methodology. The company demonstrates strong financial health, consistent growth, and high profitability, making it a noteworthy candidate for long-term investment consideration.

Key Strengths of KLA CORP

High Return on Invested Capital (ROIC) – With an ROIC (excluding cash and goodwill) of 85.39%, KLAC significantly outperforms most industry peers. This indicates efficient use of capital to generate profits.
Strong Revenue and EBIT Growth – Over the past five years, KLAC has delivered revenue growth of 9.69% annually, while EBIT growth has been even stronger at 22.46%, signaling improving profitability.
Healthy Debt Management – The company’s debt-to-free cash flow ratio stands at 1.68, meaning it could repay its debt in under two years using current cash flows. This reflects a solid financial position.
High Profit Quality – KLAC converts 105.22% of its net income into free cash flow, well above our 75% threshold, indicating strong earnings quality and cash generation.

Fundamental Analysis Summary

Our fundamental report assigns KLAC a rating of 7 out of 10, highlighting its excellent profitability and growth, along with reasonable valuation. Key takeaways include:

Profitability: Exceptional margins, with an operating margin of 41.73% and net margin of 31.99%, ranking in the top tier of its industry.
Growth: Consistent past growth in revenue and earnings, with analysts expecting continued expansion.
Valuation: While the P/E ratio of 29.24 is above the S&P 500 average, it remains below the industry norm, suggesting a fair price for its quality.

For investors seeking high-quality companies with strong fundamentals, KLAC presents a well-rounded opportunity.

Our Caviar Cruise screener lists more quality stocks and is updated regularly.