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KLA (KLAC) Down 2.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for KLA (KLAC - Free Report) . Shares have lost about 2.3% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is KLA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
KLA Corp. Beats Q2 Earnings and Revenue Estimates
KLA Corporation reported second-quarter fiscal 2021 earnings per share of $3.24, which beat the Zacks Consensus Estimate of $3.18. The figure was up 21.8% year over year and 6.9% sequentially.
Revenues increased 9.4% from the year-ago quarter and 7.3% sequentially to $1.65 billion, surpassing the Zacks Consensus Estimate by 3.03%. The reported figure was at the high end of the company’s guided range of $1.510-$1.660 million.
Foundry and logic is expected to continue performing well in 2021. The optimistic outlook is driven by next-generation technology development, capacity additions at leading-edge nodes, increasing competitive dynamics and investment in EUV infrastructure.
In addition, management stated that total utilization is high and memory customers continue to drive down device inventories, as well as plan for higher bit growth and equipment investment in 2021 to meet improving end demand.
Demand for advanced logic nodes is expected to remain healthy in 2021 driven by investment in EUV, competitive dynamics and capacity additions. Management continues to expect overall process control intensity to grow in 2021, driven by expanding value of inspection and measurement in addressing critical customer problems.
Top-Line Details
Products revenues (accounting for almost 75% of total revenues) increased 8.2% year over year to $1.24 billion.
Services revenues (25% of total revenues) also increased 13.1% from the year-ago quarter to $412.8 million.
In terms of reportable segments, Semiconductor Process Control revenues increased 9% sequentially to $1.38 billion, driven by persistent strength in foundry and logic. Foundry accounted for approximately 49% of semiconductor process control systems’ revenues, logic constituted about 10% and memory customers’ share increased to 41% from 32% in the prior quarter.
Fueled by expanded customer investment and EUV lithography, the Semiconductor Process Control business is driving adoption with new applications in optical inspection portfolio such as EUV print check for GEN5 and expanding share in new markets.
Specialty Semiconductor Process revenues were $90.6 million, up 2% sequentially. The increase was driven by strength in RF, MEMS and advance packaging.
The segment is expected to further benefit from expanding RF demand to support 5G infrastructure investment, particularly in China.
PCB, Display and component inspection revenues declined 1% sequentially to $179.3 million.
The newly formed Electronics, Packaging and Components or EPC group reported strong results for the quarter, driven by its high exposure to 5G infrastructure and the smartphone market.
Operating Details
Non-GAAP gross margin was 61.8% versus 62.1% in the prior quarter. The gross margin was slightly below the midpoint of the guided range of 61-63%.
Total operating expenses remained flat year over year to $411 million. However, as a percentage of sales, research and development as well as selling, general and administrative costs decreased from the prior-year quarter.
Balance Sheet
KLA Corp. ended the quarter with cash, cash equivalents and a marketable securities balance of $2.3 billion compared with $2.04 billion in the fiscal first quarter.
Cash from operations was $561.1 million for the fiscal second quarter versus $512.2 million in the prior quarter.
During the quarter, the company paid $139.6 million in dividends and repurchased $177.5 million shares.
Fiscal Third-Quarter 2021 Guidance
For third-quarter fiscal 2021, revenues are expected between $1.665 million and $1.815 million. The company expects non-GAAP EPS within $3.23-$3.91.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 9.18% due to these changes.
VGM Scores
At this time, KLA has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise KLA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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KLA (KLAC) Down 2.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for KLA (KLAC - Free Report) . Shares have lost about 2.3% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is KLA due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
KLA Corp. Beats Q2 Earnings and Revenue Estimates
KLA Corporation reported second-quarter fiscal 2021 earnings per share of $3.24, which beat the Zacks Consensus Estimate of $3.18. The figure was up 21.8% year over year and 6.9% sequentially.
Revenues increased 9.4% from the year-ago quarter and 7.3% sequentially to $1.65 billion, surpassing the Zacks Consensus Estimate by 3.03%. The reported figure was at the high end of the company’s guided range of $1.510-$1.660 million.
Foundry and logic is expected to continue performing well in 2021. The optimistic outlook is driven by next-generation technology development, capacity additions at leading-edge nodes, increasing competitive dynamics and investment in EUV infrastructure.
In addition, management stated that total utilization is high and memory customers continue to drive down device inventories, as well as plan for higher bit growth and equipment investment in 2021 to meet improving end demand.
Demand for advanced logic nodes is expected to remain healthy in 2021 driven by investment in EUV, competitive dynamics and capacity additions. Management continues to expect overall process control intensity to grow in 2021, driven by expanding value of inspection and measurement in addressing critical customer problems.
Top-Line Details
Products revenues (accounting for almost 75% of total revenues) increased 8.2% year over year to $1.24 billion.
Services revenues (25% of total revenues) also increased 13.1% from the year-ago quarter to $412.8 million.
In terms of reportable segments, Semiconductor Process Control revenues increased 9% sequentially to $1.38 billion, driven by persistent strength in foundry and logic. Foundry accounted for approximately 49% of semiconductor process control systems’ revenues, logic constituted about 10% and memory customers’ share increased to 41% from 32% in the prior quarter.
Fueled by expanded customer investment and EUV lithography, the Semiconductor Process Control business is driving adoption with new applications in optical inspection portfolio such as EUV print check for GEN5 and expanding share in new markets.
Specialty Semiconductor Process revenues were $90.6 million, up 2% sequentially. The increase was driven by strength in RF, MEMS and advance packaging.
The segment is expected to further benefit from expanding RF demand to support 5G infrastructure investment, particularly in China.
PCB, Display and component inspection revenues declined 1% sequentially to $179.3 million.
The newly formed Electronics, Packaging and Components or EPC group reported strong results for the quarter, driven by its high exposure to 5G infrastructure and the smartphone market.
Operating Details
Non-GAAP gross margin was 61.8% versus 62.1% in the prior quarter. The gross margin was slightly below the midpoint of the guided range of 61-63%.
Total operating expenses remained flat year over year to $411 million. However, as a percentage of sales, research and development as well as selling, general and administrative costs decreased from the prior-year quarter.
Balance Sheet
KLA Corp. ended the quarter with cash, cash equivalents and a marketable securities balance of $2.3 billion compared with $2.04 billion in the fiscal first quarter.
Cash from operations was $561.1 million for the fiscal second quarter versus $512.2 million in the prior quarter.
During the quarter, the company paid $139.6 million in dividends and repurchased $177.5 million shares.
Fiscal Third-Quarter 2021 Guidance
For third-quarter fiscal 2021, revenues are expected between $1.665 million and $1.815 million. The company expects non-GAAP EPS within $3.23-$3.91.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 9.18% due to these changes.
VGM Scores
At this time, KLA has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise KLA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.