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KLA (KLAC) Hits 52-Week High, Can the Run Continue?

Have you been paying attention to shares of KLA (KLAC)? Shares have been on the move with the stock up 23.1% over the past month. The stock hit a new 52-week high of $426.84 in the previous session. KLA has gained 63.1% since the start of the year compared to the 30% move for the Zacks Computer and Technology sector and the 23.8% return for the Zacks Electronics - Miscellaneous Products industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 27, 2021, KLA reported EPS of $4.64 versus consensus estimate of $4.45 while it beat the consensus revenue estimate by 2.91%.

For the current fiscal year, KLA is expected to post earnings of $21.19 per share on $9.19 billion in revenues. This represents a 45.64% change in EPS on a 32.78% change in revenues. For the next fiscal year, the company is expected to earn $21.19 per share on $9.4 billion in revenues. This represents a year-over-year change of -0.01% and 2.34%, respectively.

Valuation Metrics

KLA may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

KLA has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 19.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 24.9X versus its peer group's average of 8.6X. Additionally, the stock has a PEG ratio of 1.23. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, KLA currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if KLA passes the test. Thus, it seems as though KLA shares could still be poised for more gains ahead.

How Does KLA Stack Up to the Competition?

Shares of KLA have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including One Stop Systems (OSS), Mitsubishi Electric (MIELF), and Teradyne (TER), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 36% of all the industries we have in our universe, so it looks like there are some nice tailwinds for KLA, even beyond its own solid fundamental situation.


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KLA Corporation (KLAC): Free Stock Analysis Report
 
Teradyne, Inc. (TER): Free Stock Analysis Report
 
One Stop Systems, Inc. (OSS): Free Stock Analysis Report
 
Mitsubishi Electric Corporation (MIELF): Free Stock Analysis Report
 
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