Shares of Kulicke and Soffa Industries Inc. (NASDAQ: KLIC) are receiving a lot of investor interest as of late due to the stock's 15.7% increase over the last month. Shareholders are now asking themselves whether the company's current stock price is reflective of its true value or if shares have even further upside from here.
Let's take a look at Kulicke and Soffa's value and outlook based on its most recent financial data to see if there are any catalysts for a price change.
What's The Opportunity In Kulicke and Soffa?
Welcoming news for investors, Kulicke and Soffa is still trading at a fairly cheap price. According to our 10 valuation analyses, the intrinsic value for the stock is $33.48 per share and is currently trading at $25.81 in the market. This means that there is still an opportunity to buy now.
|Analysis||Model Fair Value||Upside (Downside)|
|10-yr DCF Revenue Exit||$35.04||35.8%|
|5-yr DCF Revenue Exit||$35.11||36.0%|
|Peer Revenue Multiples||$31.05||20.3%|
|10-yr DCF EBITDA Exit||$40.03||55.1%|
|5-yr DCF EBITDA Exit||$42.54||64.8%|
|Peer EBITDA Multiples||$31.60||22.4%|
|10-yr DCF Growth Exit||$34.34||33.0%|
|5-yr DCF Growth Exit||$34.05||31.9%|
|Peer P/E Multiples||$23.75||-8.0%|
|Earnings Power Value||$27.32||5.8%|
Click on any of the analyses above to view the latest model with real-time data.
What’s more interesting is that Kulicke and Soffa’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can We Expect Growth From Kulicke and Soffa?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matters the most, a more compelling investment thesis would be high growth potential at a cheap price.
source: finbox.io data explorer
With net income expected to grow at an average rate of 14.5% over the next couple years, the future certainly appears bright for Kulicke and Soffa. It looks like higher cash flows are in the cards for shareholders, which should feed into a higher stock valuation.
What This Means For Investors
Growth investors typically look to invest in companies that are expanding sales, gaining market share and building customer bases. On the other hand, value investors often argue that the most successful investments are in companies that deliver the highest cash flows while trading at the lowest valuation.
But why not put those hands together? A company that has both growth and value characteristics would certainly make the most attractive investment. So what did we find out about Kulicke and Soffa?
Kulicke and Soffa's optimistic future growth does not appear to have been fully factored into the current share price with the stock still trading below its intrinsic value. Therefore, it may be a good time to purchase shares or increase your position in the company.
It is important to note that there are a variety of other fundamental factors that I have not taken into consideration in this article. If you have not done so already, I highly recommend that you complete your research on Kulicke and Soffa by taking a look at the following:
Risk Metrics: what is Kulicke and Soffa's Altman Z score? It's a famous formula used to predict the probability that a firm will go into bankruptcy within two years. View the company's Altman Z score here.
Efficiency Metrics: how much free cash flow does Kulicke and Soffa generate as a percentage of total sales? Has it been increasing or decreasing over time? Review the firm's free cash flow margin here.
Forecast Metrics: what is Kulicke and Soffa's projected EBITDA margin? Is the company expected to improve its profitability going forward? Analyze the company's projected EBITDA margin here.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
Matt can be reached at firstname.lastname@example.org.
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.