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Bull Of The Day: Kulicke and Soffa Industries (KLIC)

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Kulicke and Soffa Industries (KLIC - Free Report) is a Zacks Rank #1 (Strong Buy) and is has the growth divergence that I love to see.  What is a growth divergence?  Well the Zacks Style Score for KLIC show a D for Value and an A for Growth.  Whenever I see a big divergence between the two I know I am on the right path for a growth stock.  Let’s take a deeper look at this stock in this Bull of the Day article.

Description

Kulicke & Soffa is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments. As a pioneer in the semiconductor space, K&S has provided customers with market leading packaging solutions for decades. In recent years, K&S has expanded its product offerings through strategic acquisitions and organic development, adding advanced packaging, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings. Combined with its extensive expertise in process technology and focus on development, K&S is well positioned to help customers meet the challenges of packaging and assembling the next-generation of electronic devices.

Earnings History

I see a good earnings history with 3 beats and 1 miss of the Zacks Consensus Estimate over the last year.  The beats were all of size and the lone miss was just 2 cents or -6%.

The average positive earnings surprise over the last four quarters was 32%.

Estimate Revisions

The numbers have dramatically risen for KLIC.

This quarter moved from 48 cents to 88 cents in the last 30 days.

Next quarter jumped from 10 cents to 87 cents over the last 60 days.

The fiscal year 2021 moved from $1.35 to $3.18 and next fiscal year moved from $2.05 to $3.01.

I cannot recall seeing estimates move that much for a name of this size.

Valuation

I like the valuation here with a 15x forward earnings multiple after posting 85% topline growth in the most recent quarter.  The price to book is 3.7x and that is low for the peer group.  I also see a price to sales multiple of 4x and that too is lower for the group.

Margins have steadily improved over the last three quarters with operating margin moving from 8.8% to 9.6% to 13.1% -- that is a lot.  That has driven the growth in earnings and clearly margins are expected to keep improving.

 

Chart

 

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