KLA Jumps 96% in a Year: Is There More Room for the Stock to Grow?

Core Insights - KLA Corporation (KLAC) shares have increased by 96.2% over the past 12 months, significantly outperforming the Zacks Computer and Technology sector's return of 24.6% and the Zacks Electronics-Miscellaneous Products industry's appreciation of 22.3% [1][8] - The company is experiencing strong demand driven by advanced packaging and AI infrastructure investments, which are contributing to its top-line growth [8][20] Stock Performance - KLA has outperformed peers such as Applied Materials (AMAT), Teradyne (TER), and Axcelis Technologies (ACLS), which returned 28.78%, 58.2%, and 20.8% respectively over the same period [2] - The stock is currently trading above both the 50-day and 200-day moving averages, indicating a bullish trend [9][11] Valuation - KLA is trading at a forward 12-month price-to-earnings (P/E) ratio of 35.02X, which is higher than the broader sector's 27.66X and peers like Applied Materials at 28.78X and Axcelis at 19.57X [5] - The company has a Value Score of F, suggesting a premium valuation despite its strong performance [5] Growth Drivers - Advanced packaging revenues are projected to exceed $925 million in calendar 2025, representing a 70% increase from 2024 [11] - The advanced packaging market is expected to grow more than 20% in 2025 compared to the previous year, driven by rising process control demand [14] - KLA anticipates outperforming the mid-to-high single-digit wafer fabrication equipment (WFE) growth rate estimated for 2025 [14] Financial Health - KLA ended the first quarter of fiscal 2026 with $4.7 billion in cash and cash equivalents, alongside $5.9 billion in debt, indicating strong liquidity [16] - The company generated an operating cash flow of $1.16 billion and free cash flow of $1.07 billion in the first quarter, with $545 million spent on share repurchases and $254 million on dividends [17] Earnings Estimates - The Zacks Consensus Estimate for fiscal 2026 earnings is $35.44 per share, reflecting a 6.5% growth from 2025 [18] - The consensus for fiscal 2026 revenues is $13.04 billion, indicating a 7.3% increase from the previous year [18] - For the second quarter of fiscal 2026, earnings are estimated at $8.75 per share, showing a 6.7% growth year-over-year [19]