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KLA (KLAC) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

KLA (KLAC) closed at $169.94 in the latest trading session, marking a +0.71% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.41%. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq gained 0.7%.

Prior to today's trading, shares of the maker of equipment for manufacturing semiconductors had gained 4.19% over the past month. This has outpaced the Computer and Technology sector's gain of 2.38% and the S&P 500's gain of 2.04% in that time.

Investors will be hoping for strength from KLAC as it approaches its next earnings release, which is expected to be October 30, 2019. In that report, analysts expect KLAC to post earnings of $2.20 per share. This would mark a year-over-year decline of 10.57%. Our most recent consensus estimate is calling for quarterly revenue of $1.35 billion, up 23.55% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.50 per share and revenue of $5.57 billion, which would represent changes of +12.29% and +22.01%, respectively, from the prior year.

Any recent changes to analyst estimates for KLAC should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. KLAC is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note KLAC's current valuation metrics, including its Forward P/E ratio of 17.76. This valuation marks a discount compared to its industry's average Forward P/E of 21.01.

It is also worth noting that KLAC currently has a PEG ratio of 1.53. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Electronics - Miscellaneous Products industry currently had an average PEG ratio of 1.53 as of yesterday's close.

The Electronics - Miscellaneous Products industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 85, which puts it in the top 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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