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Here's Why Knowles (KN) is an Enticing Investment Bet Now

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  • KN

Shares of Knowles Corporation KN have soared 24.7% over the past year, driven by healthy revenues on the back of a flexible business model and quick time-to-market schedule to meet clients’ evolving needs. Earnings estimates for the current fiscal have increased 11.5% since September 2020 and 6.2% for the next fiscal since October 2020, implying robust growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) communication components manufacturer appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Growth Drivers

Headquartered in Itasca, IL, Knowles is a premier provider of advanced micro-acoustic, audio processing and precision device solutions, serving the mobile consumer electronics, communications, medical, defense, automotive and industrial markets. Leveraging its leading position in MEMS (micro-electro-mechanical systems) microphones and strong capabilities in audio processing technologies, the company optimizes audio systems and improves user experience in mobile, ear and IoT applications. Knowles also offers acoustic components, high-end capacitors and mmWave RF solutions for diverse markets.

Proprietary manufacturing techniques and global scale of operations have facilitated the company to fine tune its business with the evolving customer demands and invest in high-value solutions. The transformation from an acoustic component supplier to an audio solutions provider has enabled the company to migrate to higher-value solutions and increase content per device. This, in turn, has empowered it to capitalize on the positive macro trends in audio and edge processing solutions.

Voice-powered interactions are fast emerging as a critical and necessary feature as consumers tend to engage with technology through natural, spoken commands across the mobile, ear and IoT platforms. This has led to a wide proliferation of products ranging from mobile phones to headsets, and from smart speakers to household appliances. Knowles aims to capitalize on its unique capabilities in acoustics, digital signal processing and algorithms to cater to these demands. The acquisition of Audience further helped the company gain essential digital signal processing and algorithm capabilities. Strong business focus, disciplined capital management and continuous R&D (research & development) initiatives have helped Knowles to command a leading market position in MEMS microphones, balanced armature speakers, edge processors, high performance capacitors and radio frequency filtering solutions. Its MEMS microphones are the smallest of its kind with the highest signal to noise ratio at the lowest power, while the balanced armature speakers offer the greatest output at the lowest power.

Knowles recently launched the AISonic Bluetooth Standard Solution that enables seamless voice integration to Bluetooth devices. The package allows manufacturers to integrate voice-driven calling and far-field speech recognition capabilities into devices. The solution balances scalability and flexibility for easy integration across a wide range of embedded platforms. This has helped Knowles’ partners to increase production of Alexa Voice Service and Alexa Auto solutions. As connected devices come to market, it has become even more crucial to rapidly integrate voice capabilities in a hassle-free manner.

With a VGM Score of B, the stock delivered a positive earnings surprise of 19.3%, on average, in the trailing four quarters. Knowles is housed within the Communication - Components industry, which carries a Zacks Industry Rank #55, placing it among the top 22% of more than 250 Zacks industries. The stock’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates encouraging prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1. Consequently, the stock appears to be an enticing investment option in the volatile market.

Other Key Picks

Some other top-ranked stocks in the industry are Plantronics, Inc. PLT, sporting a Zacks Rank #1, and Corning Incorporated GLW and Viavi Solutions Inc. VIAV, both carrying a Zacks Rank #2 (Buy).

Plantronics delivered a trailing four-quarter earnings surprise of 560.4%, on average.

Corning has a long-term earnings growth expectation of 2%. It delivered a positive earnings surprise of 41.6%, on average, in the trailing four quarters.

Viavi delivered a trailing four-quarter earnings surprise of 20.2%, on average.

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Corning Incorporated (GLW) : Free Stock Analysis Report

Knowles Corporation (KN) : Free Stock Analysis Report

Plantronics, Inc. (PLT) : Free Stock Analysis Report

Viavi Solutions Inc. (VIAV) : Free Stock Analysis Report

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