KLA Corp. (NASDAQ:KLAC)

A distinct valuation cycle is evident across all measured metrics. An initial period of multiple compression occurred between September 2021 and September 2022, reaching a trough across most indicators. This was followed by a sustained and aggressive expansion of valuation multiples from early 2023 through June 2026, ending with a moderate correction in the final quarter of the observed period.

Price to Earnings (P/E) and Price to Operating Profit (P/OP)

These two ratios exhibit nearly identical trajectories, indicating a consistent relationship between net income and operating profit. Both metrics reached their lowest points in September 2022, with the P/E at 13.89 and the P/OP at 11.55. From this baseline, a significant bullish trend emerged, peaking in June 2026 at 52.26 for P/E and 44.60 for P/OP. The subsequent drop to 41.49 (P/E) and 35.27 (P/OP) by September 2026 suggests a late-stage valuation adjustment.

Price to Sales (P/S)

The revenue multiple followed a similar U-shaped pattern. After declining from 7.22 in September 2021 to a low of 4.62 in September 2022, the ratio entered a period of rapid growth. The P/S ratio increased more than threefold from its trough to reach a peak of 18.59 in June 2026, before retreating to 15.04 in the final quarter.

Price to Book Value (P/BV)

The P/BV ratio displays the highest degree of volatility. A notable anomaly occurred in June 2022, where the ratio spiked to 40.04 before sharply correcting to 21.67 in the following quarter. Following this volatility, the ratio trended upward from a low of 19.77 in March 2023 to a secondary peak of 39.76 in June 2026. The final value of 33.44 aligns with the general downward correction seen across all other valuation ratios in the final period.

Overall, the synchronized increase across P/E, P/OP, and P/S ratios from 2023 to 2026 suggests a period of significant market optimism or a substantial increase in the premium attributed to the company's growth prospects. The convergence of these trends indicates that the stock's valuation became increasingly decoupled from its historical 2021-2022 levels before experiencing a slight contraction in late 2026.

An analysis of the financial valuation metrics reveals a significant expansion in the price-to-earnings (P/E) multiple over the observed period, driven by a share price increase that substantially outpaced the growth in earnings per share (EPS).

Share Price Performance

The share price exhibited a period of relative stability and moderate volatility between September 2021 and September 2023, fluctuating between 31.93 and 49.65. A strong bullish trend emerged starting in December 2023, with the price ascending from 59.94 to a peak of 193.22 by June 2026. A correction occurred in the final quarter, with the price receding to 167.43 by September 2026.

Earnings Per Share (EPS) Trends

EPS demonstrated a consistent, long-term upward trajectory, growing from 1.80 in September 2021 to 4.04 by September 2026. While there was a temporary contraction in earnings between September 2023 and March 2024, where EPS dipped to 1.94, the subsequent recovery was robust, maintaining a steady climb through the end of the period.

P/E Ratio Evolution

The P/E ratio transitioned through three distinct phases. From September 2021 to March 2023, the ratio remained conservative, fluctuating between 13.89 and 19.76. A period of rapid valuation expansion began in June 2023, with the multiple climbing from 20.04 to a peak of 52.26 in June 2026. This indicates a significant increase in the premium investors were willing to pay per dollar of earnings. The period concluded with a contraction to 41.49 in September 2026, coinciding with the decline in share price despite continued EPS growth.

The divergence between the linear growth of earnings and the exponential growth of the share price resulted in a substantial inflation of the valuation multiple. The peak P/E ratio in mid-2026 suggests a period of peak market optimism, while the final quarterly shift indicates a normalization of the valuation multiple.

The valuation analysis reveals a significant expansion in the Price to Operating Profit (P/OP) multiple over the observed period, driven primarily by a share price increase that substantially outpaced the growth in operating profit per share.

Share Price Trajectory

The share price exhibited a period of relative volatility and consolidation between September 2021 and September 2023, fluctuating between 31.93 US$ and 49.65 US$. Following this phase, an aggressive upward trend commenced in December 2023, with the price ascending from 59.94 US$ to a peak of 193.22 US$ by June 2026. A moderate correction occurred in the final quarter, ending at 167.43 US$ in September 2026.

Operating Profit per Share Growth

Operating profit per share demonstrated a more stable and linear growth pattern compared to the share price. After rising from 1.83 US$ in September 2021 to a peak of 3.02 US$ in March 2023, the metric experienced a temporary contraction, dipping to 2.37 US$ by March 2024. However, a consistent recovery followed, with profit per share climbing steadily to 4.75 US$ by September 2026.

P/OP Ratio Analysis

The P/OP ratio underwent three distinct phases. First, a compression phase occurred from September 2021 to September 2022, where the ratio dropped from 19.37 to 11.55, suggesting a period of valuation contraction. Second, an expansion phase began in late 2023, with the ratio climbing sharply from 24.43 in December 2023 to a peak of 44.60 in June 2026. This indicates a significant increase in the premium investors were willing to pay relative to operating earnings. Finally, a reduction to 35.27 was observed in September 2026, aligning with the dip in share price.

Valuation Divergence

A notable divergence is observed between earnings growth and valuation multiples. While operating profit per share increased by approximately 159% from the start of the period to the end, the share price increased by approximately 370%. This decoupling resulted in the P/OP ratio ending significantly higher (35.27) than its initial level (19.37), signaling a shift toward a more aggressive valuation multiple.

An analysis of the valuation metrics reveals a significant expansion in the market valuation multiple over the observed period, characterized by a transition from a period of contraction to one of aggressive growth.

Share Price Trajectory

The share price exhibited a volatile but generally upward trend. Following a period of relative stability between September 2021 and December 2022, where prices fluctuated between 31.93 and 39.94, a sustained bullish trend emerged. The price accelerated sharply starting in 2024, reaching a peak of 193.22 in June 2026 before experiencing a correction to 167.43 by September 2026.

Sales per Share Performance

Revenue generation on a per-share basis demonstrated consistent and steady growth. Starting at 4.92 in September 2021, sales per share increased incrementally throughout the period, reaching 11.13 by September 2026. This indicates a reliable upward trajectory in fundamental operational performance, independent of market sentiment.

Price-to-Sales (P/S) Ratio Analysis

The P/S ratio underwent three distinct phases. First, a contraction phase occurred between September 2021 and September 2022, where the ratio declined from 7.22 to a low of 4.62. Second, a stabilization and moderate recovery phase followed, with the ratio fluctuating between 4.99 and 9.91 through March 2024. Finally, an expansionary phase began in early 2025, seeing the ratio climb rapidly from 7.74 to a peak of 18.59 in June 2026. This suggests that during the latter period, the share price increased at a rate far exceeding the growth in sales per share, indicating a significant re-rating of the asset by the market.

Valuation Divergence

The divergence between the linear growth of sales per share and the exponential growth of the share price is most evident in the 2025-2026 window. The peak P/S ratio of 18.59 represents a substantial premium compared to the historical average seen in 2021-2022, reflecting heightened investor expectations or a shift in the perceived risk-reward profile of the equity.

The valuation trajectory of the common stock exhibits a significant expansion in the Price to Book Value (P/BV) multiple over the analyzed period, transitioning from a baseline of approximately 11x to 14x in late 2021 to a sustained range between 33x and 40x by 2026. This trend indicates a substantial increase in the market premium attributed to the company's assets relative to their accounting value.

Share Price Performance

A strong long-term bullish trend is observed in the share price, which rose from 35.53 US$ in September 2021 to a peak of 193.22 US$ in June 2026. While the price experienced volatility between 2021 and 2023, a period of accelerated growth began in late 2023, with the price more than doubling between December 2023 and June 2026 before a slight correction to 167.43 US$ in the final quarter.

Book Value per Share (BVPS) Evolution

The book value per share demonstrated overall growth, increasing from 2.55 US$ in September 2021 to 5.01 US$ by September 2026. A notable anomaly occurred in June 2022, where the BVPS dropped sharply to 0.99 US$ from 2.73 US$ in the preceding quarter. Following this contraction, a consistent and steady recovery trend was maintained, with the value climbing incrementally every quarter from September 2022 through September 2026.

P/BV Ratio Analysis

The P/BV ratio displays three distinct phases. First, a period of relative stability (September 2021 to March 2022) with ratios between 11.68 and 13.95. Second, a period of high volatility centered around June 2022, where the ratio spiked to 40.04 due to the collapse in book value. Third, a phase of structural valuation expansion beginning in December 2023, where the ratio climbed from 26.63 to a peak of 39.76 in June 2026. This suggests that market participants shifted toward valuing the company based on growth expectations or intangible assets rather than tangible book value.

The divergence between the growth rate of the share price and the growth rate of the book value is the primary driver of the increased P/BV ratio. While the BVPS approximately doubled over the period, the share price increased by nearly 4.7 times, leading to a compressed equity base relative to market capitalization.