Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of KLA-Tencor (NASDAQ:KLAC) are down today by about 8% after bottoming at a 10% loss in the morning. The market is not happy with the company's forward guidance, despite a decent earnings report for the fiscal third quarter.
So what: KLA's revenue of $729 million represented a 13% year-over-year decline, but still narrowly beat the $726.8 million consensus. Earnings per share of $1.01 were better, as that figure bested the $0.85 consensus by 19% on the upside. However, the company's upcoming quarter looks to be ugly -- KLA expects revenue in the $670 million to $730 million range, and EPS in the $0.66 to $0.86 range. Not only are these well below the current quarter's results, they also undershoot the Street's consensus figures of $763.2 million in revenue, and $0.97 in EPS.
Now what: This wasn't a pretty quarter, and guidance isn't pleasant, but KLA looks rather cheap at a 12.6 P/E with a 3% dividend yield after the drop. However, the guidance begs the question -- is this company simply becoming a value trap now? The stock has moved around a lot over the past year, but appears largely range-bound and, until today, KLA was near the top of its range. Without forward momentum, cheap won't matter. Investors need to see growth over the long term.
Want more news and updates? Add KLA-Tencor to your Watchlist now.
The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
KLA-Tencor and Lam Research Stocks Drop on Possible Merger Delay
The semiconductor equipment companies may have more trouble combining than previously thought.
These 3 Stocks Led the S&P 500 Higher in October
The stock market soared in October. Find out which stocks contributed the most to its gains.
Why KLA-Tencor Corp and Lam Research Corporation Jumped on Wednesday
The two makers of semiconductor manufacturing tools are joining forces in a $10.6 billion merger.