KLA-Tencor (KLAC) Showing Signs Of A Dead Cat Bounce Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified KLA-Tencor ( KLAC) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified KLA-Tencor as such a stock due to the following factors:

  • KLAC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $133.2 million.
  • KLAC has traded 464,276 shares today.
  • KLAC is up 3.1% today.
  • KLAC was down 20% yesterday.

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More details on KLAC:

KLA-Tencor Corporation designs, manufactures, and markets process control and yield management solutions worldwide. The stock currently has a dividend yield of 2.4%. KLAC has a PE ratio of 25.8. Currently there are 4 analysts that rate KLA-Tencor a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for KLA-Tencor has been 1.9 million shares per day over the past 30 days. KLA-Tencor has a market cap of $13.8 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.43 and a short float of 3.8% with 2.84 days to cover. Shares are up 30.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates KLA-Tencor as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • KLAC's debt-to-equity ratio is very low at 0.21 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 4.24, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, KLAC's share price has jumped by 30.41%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, KLAC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market on the basis of return on equity, KLA-TENCOR CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for KLA-TENCOR CORP is rather high; currently it is at 58.48%. Regardless of KLAC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KLAC's net profit margin of 11.23% is significantly lower than the industry average.
  • KLAC, with its decline in revenue, underperformed when compared the industry average of 18.6%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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