Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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Highlights from the ratings report include:
- KLAC's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.07, which clearly demonstrates the ability to cover short-term cash needs.
- The gross profit margin for KLA-TENCOR CORP is rather high; currently it is at 60.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.82% is above that of the industry average.
- Net operating cash flow has significantly increased by 58.25% to $414.78 million when compared to the same quarter last year. In addition, KLA-TENCOR CORP has also vastly surpassed the industry average cash flow growth rate of 5.75%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
KLA-Tencor Corporation designs, manufactures, and markets process control and yield management solutions for the semiconductor and related nanoelectronics industries. KLA-Tencor has a market cap of $9.1 billion and is part of the technology sector and electronics industry. The company has a P/E ratio of 14.00, below the S&P 500 P/E ratio of 18.00. Shares are up 12.7% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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