As of May 23, 2025, KLA Corp has a Discounted Cash Flow (DCF) derived fair value of $653.44 per share. With the current market price at $767.51, this represents a potential upside of -14.9%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $537.49 |
| DCF Fair Value (10-year) | $653.44 |
| Potential Upside (5-year) | -30.0% |
| Potential Upside (10-year) | -14.9% |
| Discount Rate (WACC) | 8.4% - 11.4% |
Revenue is projected to grow from $9812 million in 06-2024 to $21400 million by 06-2034, representing a compound annual growth rate of approximately 8.1%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 06-2024 | 9812 | 7% |
| 06-2025 | 11376 | 16% |
| 06-2026 | 12069 | 6% |
| 06-2027 | 13656 | 13% |
| 06-2028 | 15050 | 10% |
| 06-2029 | 16120 | 7% |
| 06-2030 | 17461 | 8% |
| 06-2031 | 18449 | 6% |
| 06-2032 | 19411 | 5% |
| 06-2033 | 20381 | 5% |
| 06-2034 | 21400 | 5% |
Net profit margin is expected to improve from 28% in 06-2024 to 38% by 06-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 06-2024 | 2762 | 28% |
| 06-2025 | 3500 | 31% |
| 06-2026 | 3909 | 32% |
| 06-2027 | 4633 | 34% |
| 06-2028 | 5325 | 35% |
| 06-2029 | 5928 | 37% |
| 06-2030 | 6467 | 37% |
| 06-2031 | 6881 | 37% |
| 06-2032 | 7290 | 38% |
| 06-2033 | 7706 | 38% |
| 06-2034 | 8146 | 38% |
with a 5-year average of $262 million. Projected CapEx is expected to maintain at approximately 3% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 06-2025 | 302 |
| 06-2026 | 330 |
| 06-2027 | 352 |
| 06-2028 | 377 |
| 06-2029 | 420 |
| 06-2030 | 458 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 71 |
| Days Inventory | 262 |
| Days Payables | 39 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 3M/2025 | 1096 | 104 | 88 | 36 | 868 |
| 2026 | 4879 | 464 | 372 | 249 | 3794 |
| 2027 | 5734 | 550 | 420 | 591 | 4173 |
| 2028 | 6554 | 632 | 463 | 309 | 5150 |
| 2029 | 7287 | 704 | 496 | 290 | 5797 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 537.49 | -30.0% |
| 10-Year DCF (Growth) | 653.44 | -14.9% |
| 5-Year DCF (EBITDA) | 578.07 | -24.7% |
| 10-Year DCF (EBITDA) | 674.65 | -12.1% |
Is KLA Corp (KLAC) a buy or a sell? KLA Corp is definitely a sell. Based on our DCF analysis, KLA Corp (KLAC) appears to be overvalued with upside potential of -14.9%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider reducing exposure at the current market price of $767.51.