Financial Review: KLA (KLAC) and Its Competitors

KLA (NASDAQ:KLAC) is one of 221 publicly-traded companies in the “Semiconductors & Semiconductor Equipment” industry, but how does it compare to its peers? We will compare KLA to related businesses based on the strength of its dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Insider & Institutional Ownership

86.7% of KLA shares are owned by institutional investors. Comparatively, 54.6% of shares of all “Semiconductors & Semiconductor Equipment” companies are owned by institutional investors. 79.4% of KLA shares are owned by company insiders. Comparatively, 11.9% of shares of all “Semiconductors & Semiconductor Equipment” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

KLA pays an annual dividend of $0.92 per share and has a dividend yield of 0.7%. KLA pays out 23.0% of its earnings in the form of a dividend. As a group, “Semiconductors & Semiconductor Equipment” companies pay a dividend yield of 1.0% and pay out 29.1% of their earnings in the form of a dividend. KLA has increased its dividend for 16 consecutive years.

Risk & Volatility

KLA has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500. Comparatively, KLA’s peers have a beta of 2.80, meaning that their average stock price is 180% more volatile than the S&P 500.

Profitability

This table compares KLA and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KLA	36.25%	89.30%	30.85%
KLA Competitors	-1,279.15%	-126.37%	-3.99%

Valuation and Earnings

This table compares KLA and its peers revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
KLA	$13.58 billion	$4.83 billion	33.24
KLA Competitors	$39.42 billion	$2.48 billion	10.44

KLA’s peers have higher revenue, but lower earnings than KLA. KLA is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a breakdown of recent ratings for KLA and its peers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KLA	0	9	19	1	2.72
KLA Competitors	3492	12324	25739	993	2.57

KLA presently has a consensus price target of $220.35, indicating a potential upside of 65.74%. As a group, “Semiconductors & Semiconductor Equipment” companies have a potential upside of 59.18%. Given KLA’s stronger consensus rating and higher probable upside, analysts plainly believe KLA is more favorable than its peers.

Summary

KLA beats its peers on 12 of the 15 factors compared.

KLA Company Profile

KLA Corporation, together with its subsidiaries, engages in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions for the semiconductor and related electronics industries worldwide. It operates through three segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. The company offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers; metrology systems that are used to measure pattern dimensions, film thickness, film stress, layer-to-layer alignment, pattern placement, surface topography, and electro-optical properties for wafers; chemical process control equipment; wired and wireless sensor wafers and reticles; wafer defect inspection, review, and metrology systems; reticle inspection and metrology systems; and semiconductor software solutions that provide run-time process control, defect excursion identification, process corrections, and defect classification to accelerate yield learning rates and reduce production risk. It also provides etch, plasma dicing, deposition, and other wafer processing technologies and solutions for the semiconductor and microelectronics industry. In addition, the company offers direct imaging, inspection, optical shaping, inkjet and additive printing, UV laser drilling, and computer-aided manufacturing and engineering solutions for the PCB market; inspection and electrical testing systems to identify and classify defects, as well as systems to repair defects for the display market; and inspection and metrology systems for quality control and yield improvement in advanced and traditional semiconductor packaging markets. The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019. KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.