KLAC – Market expectations are for declines in Uniform ROA, but management is confident about their operating model, revenue, and their capital return program

• KLA Corporation (KLAC:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with an 15.1x Uniform P/E, implying bearish expectations for the firm. However, management is confident about their operating model, revenue, and capital return program
  
  

• Specifically, management is confident that their operating model is accomplished by driving sustained technology leadership and that the impact of the coronavirus will be similar to past disruptions in supply in their industry’s history. Moreover, they are confident that their Other Products segment made up 4% of revenues in Q4 2020 and that metrology requirements for 3D structures have increased meaningfully. Also, they are confident in their capital return program and that process control intensity being flat is a function of memory adoption being higher than it’s been historically