What Happened:
Shares of maker of equipment for semiconductor manufacturing, KLA Corporation (NASDAQ:KLAC) jumped 5.38% in the afternoon session after the company reported second quarter earnings that beat analysts' revenue and earnings per share (EPS) expectations. Notably, EPS beat by an impressive 11%. On the other hand, its inventory levels materially increased, and its gross margin shrunk. Moving ahead, next quarter's revenue guidance came in higher than Wall Street's expectations. Overall, we think this was still a really good quarter that should please shareholders.
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What is the market telling us:
KLA Corporation's shares are quite volatile and over the last year have had 13 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was 3 months ago, when the stock gained 5.14% on the news that the company beat Wall Street's revenue and EPS estimates in its fiscal third quarter. In addition, revenue and EPS guidance for the next quarter also topped Consensus estimates, which means analyst projections should increase. Stocks generally react positively to beats and guides above expectations, and this was a good example of that.
KLA Corporation is up 35.1% since the beginning of the year. Investors who bought $1,000 worth of KLA Corporation's shares five years ago would now be looking at an investment worth $4,790.
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