), leading manufacturer of process control equipment, has announced
its decision to hike quarterly dividend by 5 cents to 50 cents per
share. This translates into an 11.0% increase from the prior
dividend of 45 cents per share. The increased dividend is expected
to be declared in Aug 2014.
Additionally, the company increased its stock buyback program by
up to 13 million shares. The company's share repurchase program,
which is now valued at over $1 billion, is expected to be completed
over the next 12 to 18 months.
The strength of KLA's business model is reflected in its strong
cash generation capabilities and commitment to return value to
shareholders. We believe that continued share buybacks and dividend
hikes will inspire investors' loyalty through higher returns from
KLA's strong balance sheet and cash flows provide financial
flexibility in matters of incremental dividend, share repurchases
and strategic acquisitions. During the last concluded quarter, KLA
spent $59.9 million on share repurchases and $74.8 million on
dividends. The cash and short-term investments balance was $3.03
billion, flat with the previous quarter. The debt to total capital
ratio, including long-term liabilities and short-term debt, was
17.0%. We remain encouraged by KLA's strong cash position and its
ability to service its long-term debts.
KLA reported decent third-quarter results, with both revenues
and earnings surpassing our expectations. We note that the
underlying demand remains strong given the high requirement for
more efficient manufacturing processes and the preference for
mobile. However, management provided a weak guidance, given order
pushouts into the second half of 2014.
Currently, KLA shares carry a Zacks Rank #3 (Hold). Other stocks
worth considering in the same sector are
Advanced Micro Devices, Inc.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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