Why KLA (KLAC) Outpaced the Stock Market Today

KLA (KLAC) closed at $180.64 in the latest trading session, marking a +1.95% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.86%. At the same time, the Dow added 0.98%, and the tech-heavy Nasdaq gained 0.96%.

Shares of the maker of equipment for manufacturing semiconductors have depreciated by 15.38% over the course of the past month, underperforming the Computer and Technology sector's loss of 0.56%, and the S&P 500's loss of 1.96%.

The upcoming earnings release of KLA will be of great interest to investors. The company's upcoming EPS is projected at $1.17, signifying a 32.95% increase compared to the same quarter of the previous year. Alongside, our most recent consensus estimate is anticipating revenue of $4.03 billion, indicating a 25.42% upward movement from the same quarter last year.

KLAC's full-year Zacks Consensus Estimates are calling for earnings of $5.43 per share and revenue of $17.85 billion. These results would represent year-over-year changes of +44.41% and +31.46%, respectively.

Investors should also take note of any recent adjustments to analyst estimates for KLA. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. At present, KLA boasts a Zacks Rank of #2 (Buy).

Looking at valuation, KLA is presently trading at a Forward P/E ratio of 32.66. This denotes a premium relative to the industry average Forward P/E of 20.27.

We can also see that KLAC currently has a PEG ratio of 1.57. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The average PEG ratio for the Electronics - Miscellaneous Products industry stood at 1.39 at the close of the market yesterday.

The Electronics - Miscellaneous Products industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 54, this industry ranks in the top 22% of all industries, numbering over 250.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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