KLA Stock To $888?
KLA (KLAC) stock has jumped 16% during the past month, and is currently trading at $1,268.75. Our multi-factor assessment suggests that it may be time to reduce exposure to KLAC stock. We are primarily concerned current valuation and a price of $888 may not be out of reach. We believe there is not much to fear in KLAC stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very High |
| What you get: | |
| Growth | Strong |
| Profitability | Very Strong |
| Financial Stability | Very Strong |
| Downturn Resilience | Moderate |
| Operating Performance | Strong |
| Stock Opinion | Relatively Expensive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $167 Bil in market cap, KLA provides process control and yield management solutions for semiconductor industries, including defect inspection, metrology, process monitoring, computational lithography software, and data analytics systems.
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[1] Valuation Looks Very High
| KLAC | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 13.3 | 3.2 |
| Price-to-Earnings Ratio | 39.4 | 23.5 |
| Price-to-Free Cash Flow Ratio | 43.2 | 20.7 |
This table highlights how KLAC is valued vs broader market. For more details see: KLAC Valuation Ratios
[2] Growth Is Strong
- KLA has seen its top line grow at an average rate of 8.7% over the last 3 years
- Its revenues have grown 22% from $10 Bil to $13 Bil in the last 12 months
- Also, its quarterly revenues grew 13.0% to $3.2 Bil in the most recent quarter from $2.8 Bil a year ago.
| KLAC | S&P 500 | |
|---|---|---|
| 3-Year Average | 8.7% | 5.5% |
| Latest Twelve Months* | 22.1% | 6.1% |
| Most Recent Quarter (YoY)* | 13.0% | 7.3% |
This table highlights how KLAC is growing vs broader market. For more details see: KLAC Revenue Comparison
[3] Profitability Appears Very Strong
- KLAC last 12 month operating income was $5.2 Bil representing operating margin of 41.8%
- With cash flow margin of 33.9%, it generated nearly $4.2 Bil in operating cash flow over this period
- For the same period, KLAC generated nearly $4.2 Bil in net income, suggesting net margin of about 33.8%
| KLAC | S&P 500 | |
|---|---|---|
| Current Operating Margin | 41.8% | 18.8% |
| Current OCF Margin | 33.9% | 20.4% |
| Current Net Income Margin | 33.8% | 13.1% |
This table highlights how KLAC profitability vs broader market. For more details see: KLAC Operating Income Comparison
[4] Financial Stability Looks Very Strong
- KLAC Debt was $6.1 Bil at the end of the most recent quarter, while its current Market Cap is $167 Bil. This implies Debt-to-Equity Ratio of 3.6%
- KLAC Cash (including cash equivalents) makes up $4.7 Bil of $16 Bil in total Assets. This yields a Cash-to-Assets Ratio of 28.7%
| KLAC | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 3.6% | 20.9% |
| Current Cash-to-Assets Ratio | 28.7% | 7.1% |
[5] Downturn Resilience Is Moderate
KLAC saw an impact slightly worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- KLAC stock fell 40.8% from a high of $445.00 on 14 January 2022 to $263.22 on 17 October 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 26 May 2023
- Since then, the stock increased to a high of $1,268.75 on 23 December 2025 $1,268.75
| KLAC | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -40.8% | -25.4% |
| Time to Full Recovery | 221 days | 464 days |
2020 Covid Pandemic
- KLAC stock fell 37.5% from a high of $182.57 on 2 January 2020 to $114.02 on 20 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 3 June 2020
| KLAC | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -37.5% | -33.9% |
| Time to Full Recovery | 75 days | 148 days |
2008 Global Financial Crisis
- KLAC stock fell 75.6% from a high of $62.46 on 19 July 2007 to $15.24 on 19 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 14 October 2013
| KLAC | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -75.6% | -56.8% |
| Time to Full Recovery | 1,790 days | 1,480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read KLAC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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