Using an unlevered Free Cash Flow to Firm (FCFF) model, we project KLA Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 10.4% to 26.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 74, DPO 38, DIO 242). At a 9.2% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $1240.27 per share, suggesting KLAC is overvalued by 15.1% at the current price of $1460.49.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,867 | 5,973 | 6,611 | 6,991 | 8,823 | 9,044 |
| (−) Net Interest | 335 | 412 | 456 | 482 | 608 | 623 |
| (+) D&A | 300 | 337 | 378 | 423 | 488 | 500 |
| EBITDA | 5,502 | 6,722 | 7,444 | 7,896 | 9,919 | 10,167 |
| (−) Tax | 519 | 637 | 706 | 746 | 942 | — |
| (−) CapEx | 418 | 513 | 567 | 600 | 757 | — |
| (−) ΔWC | 487 | 1,290 | 743 | 443 | 2,137 | — |
| Free Cash Flow (FCF) | 4,078 | 4,282 | 5,428 | 6,107 | 6,083 | — |
| Peers' EBITDA Multiple | 22.9x | |||||
| Terminal Value | 232,321 | |||||
| WACC / Discount Rate | 9.24% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,901 | 3,750 | 4,352 | 4,481 | 4,086 | 149,309 |
| Enterprise Value | 169,879 | |||||
| Projection Period | 20,571 | 12.1% | ||||
| Terminal Value | 149,309 | 87.9% | ||||
| (−) Current Net Debt | 4,009 | |||||
| Equity Value | 165,870 | |||||
| (÷) Outstanding Shares | 134M | |||||
| Fair Price | $1240 | -15.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.9x | 20.9x | 22.9x | 24.9x | 26.9x |
|---|---|---|---|---|---|
| 7.2% | $1141 | $1249 | $1356 | $1463 | $1570 |
| 8.2% | $1092 | $1194 | $1296 | $1399 | $1501 |
| 9.2% | $1045 | $1143 | $1240 | $1338 | $1436 |
| 10.2% | $1000 | $1094 | $1187 | $1280 | $1374 |
| 11.2% | $958 | $1047 | $1137 | $1226 | $1315 |
Current price: $1460.49. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.