KLA CORP (NASDAQ:KLAC) - A Semiconductor Stock With Strong Growth and Reasonable Valuation

KLA CORP (NASDAQ:KLAC) was recently identified by our Affordable Growth stock screener as a candidate worth further research. The company, a key player in semiconductor process control and yield management, combines solid growth prospects with reasonable valuation metrics while maintaining strong profitability.

Growth Prospects

KLAC demonstrates strong historical and expected growth:

• Earnings per share (EPS) grew 35.4% over the past year and has averaged 22.9% annually over the past several years.
• Revenue increased 20.3% in the last year, with a five-year average growth rate of 16.5%.
• Analysts project future EPS growth of 14.5% and revenue growth of 9.9% annually.

While growth is expected to moderate slightly, these figures remain well above industry averages.

Valuation Assessment

Despite its growth, KLAC trades at a valuation that doesn’t appear excessive:

• The forward P/E ratio of 27.2 is in line with the semiconductor industry average.
• The PEG ratio, which accounts for growth, suggests the stock is reasonably priced relative to its earnings trajectory.
• Enterprise value to EBITDA indicates KLAC is cheaper than 66% of its industry peers.

Profitability and Financial Health

KLAC excels in profitability, with standout metrics:

• Return on invested capital (ROIC) of 37.6%, outperforming 99% of semiconductor companies.
• Operating margin of 41.7% and profit margin of 32%, both ranking near the top of the industry.
• The company maintains a stable balance sheet, though its debt-to-equity ratio is higher than some peers.

For a deeper look, review the full fundamental analysis of KLAC.

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

Disclaimer

This is not investing advice. The observations here are based on data available at the time of writing, and investors should conduct their own research before making decisions.