Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin45.0%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin37.4%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
B
Years to Pay Off Debt3.9 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt$2.3B
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital$8.0B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Margin of Safety0.0%
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book27.66x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
A
Free Cash Flow$1.3B
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income12.6%
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings$1.8B
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About KLA Corporation
KLA Corporation, together with its subsidiaries, provides process control and process-enabling solutions for manufacturing wafers, reticles/masks, chemicals/materials, integrated circuits (ICs), packaged ICs, and printed circuit boards. It operates through three segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. The company offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers; chemical process control equipment; wired and wireless sensor wafers and reticles; wafer defect inspection, review, and metrology systems; reticle inspection and metrology systems; wafer inspection and metrology systems; semiconductor software solutions; KLA Pro systems; and specialty semiconductor manufacturing, benchtop metrology, surface characterization, material strength characterization, and electrical property measurement products. It also provides etch, plasma dicing, deposition and other wafer processing technologies and solutions; direct imaging, inspection, optical shaping, inkjet, and additive printing, as well as computer-aided manufacturing and engineering solutions; and components. In addition, the company offers service programs. It serves semiconductor, and semiconductor-related and electronic device manufacturers. The company operates in China, Taiwan, Korea, North America, Japan, Europe, Israel, and rest of Asia. The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019. KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.
KLA Corporation, together with its subsidiaries, provides process control and process-enabling solutions for manufacturing wafers, reticles/masks, chemicals/materials, integrated circuits (ICs), packaged ICs, and printed circuit boards. It operates through three segments: Semiconductor Process Control; Specialty Semiconductor Process; and PCB and Component Inspection. The company offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and unpatterned wafers; chemical process control equipment; wired and wireless sensor wafers and reticles; wafer defect inspection, review, and metrology systems; reticle inspection and metrology systems; wafer inspection and metrology systems; semiconductor software solutions; KLA Pro systems; and specialty semiconductor manufacturing, benchtop metrology, surface characterization, material strength characterization, and electrical property measurement products. It also provides etch, plasma dicing, deposition and other wafer processing technologies and solutions; direct imaging, inspection, optical shaping, inkjet, and additive printing, as well as computer-aided manufacturing and engineering solutions; and components. In addition, the company offers service programs. It serves semiconductor, and semiconductor-related and electronic device manufacturers. The company operates in China, Taiwan, Korea, North America, Japan, Europe, Israel, and rest of Asia. The company was formerly known as KLA-Tencor Corporation and changed its name to KLA Corporation in July 2019. KLA Corporation was incorporated in 1975 and is headquartered in Milpitas, California.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Margin of Safety
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Mr. Market is currently offering KLA Corporation at $138.49.
The business passes only 3 of 6 of Graham's defensive criteria — well below his required standard.
At $138.49, the stock trades at a 1101% premium to its Graham Number of $11.53. Graham would consider this price speculative.
There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.
Trading at 260.7x NCAV. Expected for most quality businesses — NCAV was designed to find depression-era bargains and rarely applies to modern profitable companies..
Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.
Showing Key Metrics
Income Highlights
Metric
Q3 2026
Q4 2025
Gross Profit %
61.9%▲
61.4%
Operating Margin %
45.0%▲
41.3%
Net Income %
37.4%▲
34.7%
Diluted EPS
1.18▲
0.87
Balance Sheet Highlights
Metric
Q3 2026
Q4 2025
Total Assets
$18.4B
$16.7B
Total Debt
$6.0B▼
$6.1B
Working Capital
$8.0B▲
$7.3B
Years to Pay Debt
3.87
5.33
Cash Flow Highlights
Metric
Q3 2026
Q4 2025
Free Cash Flow
$1.3B▲
$1.3B
Owner Earnings
$1.8B
$1.4B
CapEx % of Net Income
12.6%
9.2%
Income Statement
2026
2025
Tax Effect Of Unusual Items
0
0
Tax Rate For Calcs
0
0
Normalized EBITDA
1,989,433
1,499,239
Total Unusual Items
0
Total Unusual Items Excluding Goodwill
0
Net Income From Continuing Operation Net Minority Interest
1,548,588
1,145,682
Reconciled Depreciation
97,424
99,268
Reconciled Cost Of Revenue
1,577,791
1,271,210
EBITDA
1,989,433
1,499,239
EBIT
1,892,009
1,399,971
Net Interest Income
-67,927
-69,668
Interest Expense
67,927
69,668
Normalized Income
1,548,588
1,145,682
Net Income From Continuing And Discontinued Operation
1,548,588
1,145,682
Total Expenses
2,274,345
1,935,000
Diluted Average Shares
1,311,064
1,320,090
Basic Average Shares
1,305,330
1,312,780
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
1,548,588
1,145,682
Net Income Common Stockholders
1,548,588
1,145,682
Net Income
1,548,588
1,145,682
Net Income Including Noncontrolling Interests
1,548,588
1,145,682
Net Income Continuous Operations
1,548,588
1,145,682
Tax Provision
275,494
184,621
Pretax Income
1,824,082
1,330,303
Other Income Expense
30,339
37,825
Other Non Operating Income Expenses
30,339
37,825
Net Non Operating Interest Income Expense
-67,927
-69,668
Interest Expense Non Operating
67,927
69,668
Operating Income
1,861,670
1,362,146
Operating Expense
696,554
663,790
Research And Development
395,096
383,871
Selling General And Administration
301,458
279,919
Gross Profit
2,558,224
2,025,936
Cost Of Revenue
1,577,791
1,271,210
Total Revenue
4,136,015
3,297,146
Operating Revenue
4,136,015
3,297,146
Balance Sheet
2026
2025
Treasury Shares Number
Ordinary Shares Number
1,303,263
1,311,430
Share Issued
1,303,263
1,311,430
Net Debt
4,191,339
3,434,004
Total Debt
5,992,644
6,109,478
Tangible Book Value
4,521,126
3,327,116
Invested Capital
12,246,696
11,351,859
Working Capital
8,018,329
7,281,333
Net Tangible Assets
4,521,126
3,327,116
Capital Lease Obligations
269,355
223,350
Common Stock Equity
6,523,407
5,465,731
Total Capitalization
12,246,696
11,351,859
Total Equity Gross Minority Interest
6,523,407
5,465,731
Stockholders Equity
6,523,407
5,465,731
Gains Losses Not Affecting Retained Earnings
-59,406
960
Other Equity Adjustments
-59,406
960
Retained Earnings
3,997,397
2,860,594
Additional Paid In Capital
Capital Stock
2,585,416
2,604,177
Common Stock
2,585,416
2,604,177
Total Liabilities Net Minority Interest
11,881,328
11,254,497
Total Non Current Liabilities Net Minority Interest
7,326,242
7,272,025
Other Non Current Liabilities
347,378
181,928
Employee Benefits
43,733
48,767
Non Current Pension And Other Postretirement Benefit Plans
43,733
48,767
Tradeand Other Payables Non Current
299,437
252,145
Non Current Deferred Liabilities
697,063
730,694
Non Current Deferred Revenue
244,522
278,016
Non Current Deferred Taxes Liabilities
452,541
452,678
Long Term Debt And Capital Lease Obligation
5,938,631
6,058,491
Long Term Capital Lease Obligation
215,342
172,363
Long Term Debt
5,723,289
5,886,128
Current Liabilities
4,555,086
3,982,472
Other Current Liabilities
612,572
494,294
Current Deferred Liabilities
2,384,253
2,191,664
Current Deferred Revenue
1,971,056
1,820,463
Current Debt And Capital Lease Obligation
54,013
50,987
Current Capital Lease Obligation
54,013
50,987
Pensionand Other Post Retirement Benefit Plans Current
574,679
550,870
Payables And Accrued Expenses
929,569
694,657
Current Accrued Expenses
46,545
110,058
Interest Payable
46,545
110,058
Payables
883,024
584,599
Total Tax Payable
142,281
159,410
Income Tax Payable
142,281
159,410
Accounts Payable
740,743
425,189
Total Assets
18,404,735
16,720,228
Total Non Current Assets
5,831,320
5,456,423
Other Non Current Assets
210,124
164,567
Non Current Deferred Assets
1,465,678
1,514,046
Non Current Deferred Taxes Assets
1,054,617
1,144,113
Non Current Accounts Receivable
266,755
Goodwill And Other Intangible Assets
2,002,281
2,138,615
Other Intangible Assets
212,598
348,018
Goodwill
1,789,683
1,790,597
Net PPE
1,886,482
1,639,195
Accumulated Depreciation
-1,740,989
-1,588,936
Gross PPE
3,627,471
3,228,131
Construction In Progress
181,063
210,611
Other Properties
345,151
294,427
Machinery Furniture Equipment
1,565,539
1,414,833
Buildings And Improvements
1,333,186
1,221,595
Land And Improvements
202,532
86,665
Current Assets
12,573,415
11,263,805
Other Current Assets
115,663
161,658
Current Deferred Assets
219,239
230,611
Prepaid Assets
143,971
154,399
Inventory
4,090,426
3,282,605
Other Inventories
639,024
625,503
Finished Goods
247,533
252,202
Work In Process
1,076,942
836,166
Raw Materials
2,126,927
1,568,734
Receivables
3,262,925
2,227,068
Other Receivables
129,900
93,117
Taxes Receivable
60,938
60,370
Accounts Receivable
3,072,087
2,073,581
Allowance For Doubtful Accounts Receivable
-31,540
-33,959
Gross Accounts Receivable
3,103,627
2,107,540
Cash Cash Equivalents And Short Term Investments
4,741,191
5,207,464
Other Short Term Investments
3,209,241
2,755,340
Cash And Cash Equivalents
1,531,950
2,452,124
Cash Flow
2026
2025
Free Cash Flow
1,336,183
1,262,031
Repurchase Of Capital Stock
-935,776
-547,750
Repayment Of Debt
Issuance Of Capital Stock
Capital Expenditure
-194,756
-105,576
Interest Paid Supplemental Data
131,275
7,700
Income Tax Paid Supplemental Data
61,284
283,901
End Cash Position
1,531,950
2,452,124
Beginning Cash Position
1,649,842
1,946,211
Effect Of Exchange Rate Changes
8,710
-1,433
Changes In Cash
-126,602
507,346
Financing Cash Flow
-1,479,603
-747,579
Cash Flow From Continuing Financing Activities
-1,479,603
-747,579
Net Other Financing Charges
-238,682
-5,717
Cash Dividends Paid
-305,145
-249,654
Common Stock Dividend Paid
-305,145
-249,654
Net Common Stock Issuance
-935,776
-492,208
Common Stock Payments
-935,776
-547,750
Common Stock Issuance
Net Issuance Payments Of Debt
Net Long Term Debt Issuance
Long Term Debt Payments
Investing Cash Flow
-177,938
-112,682
Cash Flow From Continuing Investing Activities
-177,938
-112,682
Net Other Investing Changes
435
15,241
Net Investment Purchase And Sale
16,383
-22,347
Sale Of Investment
754,430
863,210
Purchase Of Investment
-738,047
-885,557
Net Intangibles Purchase And Sale
Purchase Of Intangibles
Capital Expenditure Reported
-194,756
-105,576
Operating Cash Flow
1,530,939
1,367,607
Cash Flow From Continuing Operating Activities
1,530,939
1,367,607
Change In Working Capital
-165,181
78,134
Change In Other Working Capital
-67,337
17,203
Change In Other Current Liabilities
221,635
-61,147
Change In Other Current Assets
176,890
-65,267
Change In Payables And Accrued Expense
116,666
-5,027
Change In Payable
116,666
-5,027
Change In Account Payable
116,666
-5,027
Change In Inventory
-433,839
1,214
Change In Receivables
-179,196
191,158
Changes In Account Receivables
-179,196
191,158
Stock Based Compensation
84,073
73,947
Deferred Tax
-27,093
-31,728
Deferred Income Tax
-27,093
-31,728
Depreciation Amortization Depletion
97,424
99,268
Depreciation And Amortization
97,424
99,268
Operating Gains Losses
-6,872
2,304
Net Foreign Currency Exchange Gain Loss
-6,872
2,304
Net Income From Continuing Operations
1,548,588
1,145,682
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $3.2B▲ $4.1B+28.9%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 61.3%▲ 61.9%+0.6pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 58.0%▲ 45.0%-13.0pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 34.9%▲ 37.4%+2.5pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$4.1B/qtr (≈$16.5B ann.)
vs > $1.5B annualised revenue
✅ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
2.76x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$1.3B
vs Positive
Operating Cash Flow
$1.5B
Latest quarter · Buffett's cash reality check
ROIC
10.6%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
This company's primary assets are likely intangible (brand, IP, talent, network effects) and don't appear on the balance sheet. Net Assets may significantly understate intrinsic value. ROIC and free cash flow are more reliable indicators of business quality.
⚠️Revenue grew vs prior year but operating margin contracted. Possible explanations: deliberate investment in growth (hiring, marketing, R&D), input cost inflation, or pricing pressure from competition. Buffett distinguishes between spending that builds moat vs. spending that doesn't.
Peers & Industry
No auto-detected peers for Semiconductor Equipment & Materials. You can manually compare KLAC against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
0.11%
Low — management has little skin in the game
Return on Equity (ROE)
23.7%
Excellent — management generates strong returns on equity
Return on Assets (ROA)
8.4%
Strong — management uses assets efficiently
Share Buybacks (Latest Year)
$2.3B
Management is returning capital to shareholders via buybacks
Debt Trend YoY
-2.6% YoY
Debt is declining — management is deleveraging
Leadership Team
Richard Wallace
President, CEO & Executive Director
Age 65
Pay: $6,480,589
0.418% of net income
Bren Higgins
Executive VP & CFO
Age 55
Pay: $2,829,313
0.183% of net income
Ahmad Khan
President of Semiconductor Products & Customers
Age 51
Pay: $2,822,174
0.182% of net income
Brian Lorig
Executive Vice President of KLA Global Services
Age 51
Pay: $1,792,407
0.116% of net income
Kevin Kessel
Vice President of Investor Relations
Top Institutional Holders
Institution
% Owned
Shares
Blackrock Inc.
9.69%
126,198,653
Vanguard Capital Management LLC
6.55%
85,323,770
State Street Corporation
4.83%
62,892,994
Capital World Investors
3.48%
45,318,111
Invesco Ltd.
3.44%
44,848,852
FMR, LLC
3.30%
43,007,912
Vanguard Portfolio Management LLC
3.02%
39,388,674
Geode Capital Management, LLC
2.80%
36,488,344
Risk Analysis
Beta (Market Risk)
1.50
Moderate volatility — moves slightly more than market
Short Interest
1.9% of float
Low short interest — market is not heavily bearish
Debt-to-Equity
0.92x
Conservative balance sheet — low financial risk
Current Ratio
2.76x
Strong liquidity — Graham approved
52-Week Price Range
Low: $107.20Current: $138.49High: $307.37
Currently at 16% of 52-week range
KLA Corporation (KLAC) fundamental analysis — Overall grade C based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: $11.53. Margin of safety: 0%. Gross profit margin: 61.9%. Operating margin: 45.0%. Net margin: 37.4%. Market cap: $180.4B. Sector: Technology. Industry: Semiconductor Equipment & Materials. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
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and may be delayed, inaccurate, or incomplete. Past performance is not indicative of future results. Analysis, scores, and valuations are algorithmic and do not represent professional investment recommendations. Always conduct your own due
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