KLA Corporation (NASDAQ:KLAC) Exceeds Q1 Expectations, Next Quarter Sales Guidance Is Optimistic
Stock Story
Published Apr 25, 2024 16:18
Updated Apr 25, 2024 16:49
KLA Corporation (NASDAQ:KLAC) Exceeds Q1 Expectations, Next Quarter Sales Guidance Is Optimistic
Stock Story -
Semiconductor manufacturing equipment maker KLA Corporation (NASDAQ:KLAC) reported Q1 CY2024 results topping analysts' expectations, with revenue down 3% year on year to $2.36 billion. Guidance for next quarter's revenue was also optimistic at $2.5 billion at the midpoint, 2.8% above analysts' estimates. It made a non-GAAP profit of $5.26 per share, down from its profit of $5.49 per share in the same quarter last year.
Is now the time to buy KLA Corporation? Find out by reading the original article on StockStory, it's free.
KLA Corporation (KLAC) Q1 CY2024 Highlights:
- Revenue: $2.36 billion vs analyst estimates of $2.32 billion (1.7% beat)
- EPS (non-GAAP): $5.26 vs analyst estimates of $5.06 (4% beat)
- Revenue Guidance for Q2 CY2024 is $2.5 billion at the midpoint, above analyst estimates of $2.43 billion
- Gross Margin (GAAP): 57.9%, down from 58.7% in the same quarter last year
- Inventory Days Outstanding: 275, down from 283 in the previous quarter
- Free Cash Flow of $838.2 million, up 53.7% from the previous quarter
- Market Capitalization: $88.79 billion
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ:KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Semiconductor ManufacturingThe semiconductor industry is driven by demand for advanced electronic products like smartphones, PCs, servers, and data storage. The need for technologies like artificial intelligence, 5G networks, and smart cars is also creating the next wave of growth for the industry. Keeping up with this dynamism requires new tools that can design, fabricate, and test chips at ever smaller sizes and more complex architectures, creating a dire need for semiconductor capital manufacturing equipment.
Sales GrowthKLA Corporation's revenue growth over the last three years has been mediocre, averaging 16.1% annually. But as you can see below, its revenue declined from $2.43 billion in the same quarter last year to $2.36 billion. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Get The App
Even though KLA Corporation surpassed analysts' revenue estimates, this was a slow quarter for the company as its revenue dropped 3% year on year. This could mean that the current downcycle is deepening.
KLA Corporation looks like it's on the cusp of a rebound, as it's guiding to 6.2% year-on-year revenue growth for the next quarter. Analysts seem to agree as consesus estimates call for 10.8% growth over the next 12 months.
Product Demand & Outstanding InventoryDays Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business' capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, KLA Corporation's DIO came in at 275, which is 62 days above its five-year average. These numbers suggest that despite the recent decrease, the company's inventory levels are higher than what we've seen in the past.
Key Takeaways from KLA Corporation's Q1 Results We enjoyed seeing KLA Corporation exceed analysts' revenue and EPS expectations this quarter, driven by better-than-expected performance in its semiconductor process control segment. We were also glad next quarter's revenue and EPS guidance were higher than Wall Street's estimates. Management noted it expects business momentum to continue throughout the year as it reiterated that market conditions have stabilized over the last few quarters. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is up 1.1% after reporting and currently trades at $681.8 per share.
Written By: Stock Story
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.