Affordable Growth. Analyze the stocks which are showing good growth, decent profitability and health and are not overvalued from a fundamental perspective.


LAM RESEARCH CORP

Nasdaq / Information Technology / Semiconductors & Semiconductor Equipment

Fundamental Rating

7

LRCX gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 109 industry peers in the Semiconductors & Semiconductor Equipment industry. While LRCX has a great profitability rating, there are some minor concerns on its financial health. LRCX is growing strongly while it is still valued neutral. This is a good combination! These ratings could make LRCX a good candidate for growth investing.


Dividend Valuation Growth Profitability Health

9

1. Profitability

1.1 Basic Checks

In the past year LRCX was profitable.
In the past year LRCX had a positive cash flow from operations.
LRCX had positive earnings in each of the past 5 years.
Each year in the past 5 years LRCX had a positive operating cash flow.
LRCX Yearly Net Income VS EBIT VS OCF VS FCFLRCX Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B 5B

1.2 Ratios

With an excellent Return On Assets value of 23.33%, LRCX belongs to the best of the industry, outperforming 96.33% of the companies in the same industry.
LRCX has a Return On Equity of 48.98%. This is amongst the best in the industry. LRCX outperforms 95.41% of its industry peers.
LRCX has a Return On Invested Capital of 32.17%. This is amongst the best in the industry. LRCX outperforms 97.25% of its industry peers.
The Average Return On Invested Capital over the past 3 years for LRCX is significantly above the industry average of 11.32%.
The last Return On Invested Capital (32.17%) for LRCX is above the 3 year average (31.96%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 23.33%
ROE 48.98%
ROIC 32.17%
ROA(3y)23.74%
ROA(5y)22.26%
ROE(3y)57.71%
ROE(5y)56.3%
ROIC(3y)31.96%
ROIC(5y)29.69%
LRCX Yearly ROA, ROE, ROICLRCX Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60

1.3 Margins

Looking at the Profit Margin, with a value of 27.19%, LRCX belongs to the top of the industry, outperforming 88.99% of the companies in the same industry.
LRCX's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 30.88%, LRCX belongs to the top of the industry, outperforming 90.83% of the companies in the same industry.
LRCX's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 48.06%, LRCX is in the better half of the industry, outperforming 60.55% of the companies in the same industry.
LRCX's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 30.88%
PM (TTM) 27.19%
GM 48.06%
OM growth 3Y-1.8%
OM growth 5Y2.57%
PM growth 3Y-1.32%
PM growth 5Y2.5%
GM growth 3Y0.77%
GM growth 5Y1.07%
LRCX Yearly Profit, Operating, Gross MarginsLRCX Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10 20 30 40

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5

2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so LRCX is creating value.
LRCX has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, LRCX has more shares outstanding
Compared to 1 year ago, LRCX has an improved debt to assets ratio.
LRCX Yearly Shares OutstandingLRCX Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 200M 400M 600M 800M 1B
LRCX Yearly Total Debt VS Total AssetsLRCX Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 5B 10B 15B

2.2 Solvency

The Debt to FCF ratio of LRCX is 1.18, which is an excellent value as it means it would take LRCX, only 1.18 years of fcf income to pay off all of its debts.
LRCX has a Debt to FCF ratio of 1.18. This is in the better half of the industry: LRCX outperforms 73.39% of its industry peers.
LRCX has a Debt/Equity ratio of 0.39. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.39, LRCX is doing worse than 67.89% of the companies in the same industry.
Although LRCX 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.
Industry RankSector Rank
Debt/Equity 0.39
Debt/FCF 1.18
Altman-Z N/A
ROIC/WACC3.44
WACC9.36%
LRCX Yearly LT Debt VS Equity VS FCFLRCX Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B

2.3 Liquidity

LRCX has a Current Ratio of 2.45. This indicates that LRCX is financially healthy and has no problem in meeting its short term obligations.
LRCX's Current ratio of 2.45 is on the low side compared to the rest of the industry. LRCX is outperformed by 63.30% of its industry peers.
A Quick Ratio of 1.64 indicates that LRCX should not have too much problems paying its short term obligations.
LRCX's Quick ratio of 1.64 is on the low side compared to the rest of the industry. LRCX is outperformed by 66.97% of its industry peers.
Industry RankSector Rank
Current Ratio 2.45
Quick Ratio 1.64
LRCX Yearly Current Assets VS Current LiabilitesLRCX Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B 8B 10B

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7

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 28.78% over the past year.
The Earnings Per Share has been growing by 15.80% on average over the past years. This is quite good.
Looking at the last year, LRCX shows a very strong growth in Revenue. The Revenue has grown by 20.33%.
LRCX shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.08% yearly.
EPS 1Y (TTM)28.78%
EPS 3Y3.56%
EPS 5Y15.8%
EPS Q2Q%33.5%
Revenue 1Y (TTM)20.33%
Revenue growth 3Y0.63%
Revenue growth 5Y9.08%
Sales Q2Q%24.43%

3.2 Future

The Earnings Per Share is expected to grow by 15.50% on average over the next years. This is quite good.
Based on estimates for the next years, LRCX will show a quite strong growth in Revenue. The Revenue will grow by 10.63% on average per year.
EPS Next Y26.41%
EPS Next 2Y13.61%
EPS Next 3Y15.45%
EPS Next 5Y15.5%
Revenue Next Year19.47%
Revenue Next 2Y10.52%
Revenue Next 3Y10.84%
Revenue Next 5Y10.63%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
LRCX Yearly Revenue VS EstimatesLRCX Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 5B 10B 15B 20B 25B
LRCX Yearly EPS VS EstimatesLRCX Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2 4 6

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6

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 20.59 indicates a rather expensive valuation of LRCX.
Compared to the rest of the industry, the Price/Earnings ratio of LRCX indicates a somewhat cheap valuation: LRCX is cheaper than 73.39% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.22, LRCX is valued a bit cheaper.
A Price/Forward Earnings ratio of 19.05 indicates a rather expensive valuation of LRCX.
Based on the Price/Forward Earnings ratio, LRCX is valued a bit cheaper than the industry average as 71.56% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of LRCX to the average of the S&P500 Index (20.86), we can say LRCX is valued inline with the index average.
Industry RankSector Rank
PE 20.59
Fwd PE 19.05
LRCX Price Earnings VS Forward Price EarningsLRCX Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30 40 50

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, LRCX is valued a bit cheaper than 69.72% of the companies in the same industry.
LRCX's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. LRCX is cheaper than 79.82% of the companies in the same industry.
Industry RankSector Rank
P/FCF 25.13
EV/EBITDA 16.02
LRCX Per share dataLRCX EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 2 4 6 8 10

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of LRCX may justify a higher PE ratio.
LRCX's earnings are expected to grow with 15.45% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.78
PEG (5Y)1.3
EPS Next 2Y13.61%
EPS Next 3Y15.45%

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5

5. Dividend

5.1 Amount

LRCX has a Yearly Dividend Yield of 1.28%.
Compared to an average industry Dividend Yield of 2.76, LRCX pays a better dividend. On top of this LRCX pays more dividend than 82.57% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.44, LRCX's dividend is way lower than the S&P500 average.
Industry RankSector Rank
Dividend Yield 1.28%

5.2 History

The dividend of LRCX decreases each year by -20.64%.
LRCX has been paying a dividend for at least 10 years, so it has a reliable track record.
LRCX has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)-20.64%
Div Incr Years10
Div Non Decr Years10
LRCX Yearly Dividends per shareLRCX Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 0.2 0.4 0.6 0.8

5.3 Sustainability

LRCX pays out 23.95% of its income as dividend. This is a sustainable payout ratio.
DP23.95%
EPS Next 2Y13.61%
EPS Next 3Y15.45%
LRCX Yearly Income VS Free CF VS DividendLRCX Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 1B 2B 3B 4B
LRCX Dividend Payout.LRCX Dividend Payout, showing the Payout Ratio.LRCX Dividend Payout.PayoutRetained Earnings

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