Knowles (KN) AI Stock Analysis

• Market Cap: $1.26B
• Dividend Yield: N/A
• Average Volume (3M): 928.60K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.70
• Revenue Growth: -3.04%
• EPS Growth: -433.94%
• Country: US
• Employees: 5,500
• Sector: Technology
• Sector Strength: 46
• Industry: Communication Equipment
• EPS (TTM): -2.68
• Shares Outstanding: 87,689,674
• 10 Day Avg. Volume: 1,119,779
• 30 Day Avg. Volume: 928,599
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.53
• Price to Cash Flow (P/CF): -1.10
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $17.00
• Price Target Upside: 14.71% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

Knowles Corporation's overall score reflects a mixed financial performance, with strengths in balance sheet stability and cash flow generation. However, declining revenue and profitability weigh heavily. Technical analysis suggests bearish momentum, while valuation metrics are unattractive due to negative earnings. Despite the positive impact of corporate events and earnings call highlights, the stock remains under pressure due to ongoing operational challenges and cautious market sentiment.

Positive Factors

Company Transformation

Knowles has been able to undergo a radical transformation, expanding into more attractive segments which are higher margin and higher growth.

Financial Performance

Precision Devices experienced an acceleration in bookings, returning to a positive book-to-bill ratio.

Negative Factors

Inventory Issues

Precision Devices continue to face inventory accumulation in the distribution channel, representing about 40% of PD sales.

Manufacturing Challenges

Knowles posted worse results and guidance as manufacturing challenges delayed shipments of specialty film capacitors.

Knowles Business Overview & Revenue Model

Company Description

Knowles Corporation offers micro-acoustic microphones and balanced armature speakers, audio solutions, high performance capacitors, and radio frequency products for the consumer electronics, medtech, defense, electric vehicle, industrial, and communications markets. It operates in two segments, Audio and Precision Devices (PD). The Audio segment designs and manufactures audio products, including microphones, balanced armature speakers, and audio processors used in applications that serve the mobile, hearing health, True Wireless Stereo, Internet of Things, and computing markets. The PD segment is involved in the design and delivery of high-performance capacitor products and RF solutions that are used in applications, such as power supplies and medical implants, satellite communications, and radar systems, as well as for communications equipment. The company sells its products directly to original equipment manufacturers and to their contract manufacturers and suppliers, as well as through distributors. It has operations in Asia, the United States, Europe, other Americas, and internationally. The company was founded in 1946 and is headquartered in Itasca, Illinois.

How the Company Makes Money

Knowles Corporation generates revenue through the sale of its micro-acoustic components, including MEMS (Micro-Electro-Mechanical Systems) microphones, speakers, and audio processing solutions, to manufacturers in the consumer electronics, hearing health, and communications industries. A significant portion of its revenue comes from supplying these components to leading smartphone manufacturers and hearing aid producers. The company also earns from its precision device solutions, which are used in a variety of applications across medtech, industrial, and automotive markets. Strategic partnerships and collaborations with tech giants and other industry leaders further bolster its revenue streams by expanding its market reach and enhancing its product offerings.

Knowles Financial Statement Overview

Summary

Knowles faces challenges with declining revenue and profitability, as shown by the income statement. However, the balance sheet is strong, with low leverage and a high equity ratio, and cash flow performance is positive, indicating effective cash conversion from operations.

Income Statement

The income statement shows declining trends in revenue and profitability over recent years. The gross profit margin for 2024 is approximately 42.4%, which is reasonable but has decreased from previous years. The net profit margin for 2024 is around 4.2%, which is lower compared to historical performance, indicating challenges in maintaining profitability. Additionally, revenue has decreased significantly from $707.6 million in 2023 to $553.5 million in 2024, showing a concerning negative growth trend.

Balance Sheet

The balance sheet reflects a stable equity position with a debt-to-equity ratio of about 0.28 in 2024, which is favorable and indicates low financial leverage. The equity ratio is approximately 67.6%, showcasing a strong reliance on equity rather than debt. However, the decline in total assets from $1.46 billion in 2023 to $1.12 billion in 2024 highlights a reduction in the company's asset base.

Cash Flow

Cash flow analysis indicates positive operating cash flow of $130.1 million for 2024, with a free cash flow of $116.5 million, marking growth over the previous year. The operating cash flow to net income ratio is robust, suggesting effective cash generation relative to reported earnings. However, free cash flow growth is modest, and the company has experienced fluctuating cash flows from investing and financing activities in recent years.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
553.50M	707.60M	764.70M	868.10M	764.30M
	Gross Profit
234.80M	283.40M	276.30M	359.50M	271.20M
	EBIT
51.80M	51.10M	66.20M	115.80M	45.30M
	EBITDA
51.80M	98.90M	-360.00M	184.90M	110.50M
	Net Income Common Stockholders
23.40M	72.40M	-430.10M	150.40M	2.90M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
130.10M	87.30M	48.20M	68.90M	147.80M
	Total Assets
1.12B	1.46B	1.18B	1.73B	1.65B
	Total Debt
212.20M	286.70M	60.60M	96.10M	194.00M
	Net Debt
82.10M	199.40M	12.40M	27.20M	46.20M
	Total Liabilities
362.20M	428.70M	191.00M	272.10M	351.40M
	Stockholders Equity
756.00M	1.03B	992.90M	1.46B	1.30B
Cash Flow		Free Cash Flow
116.50M	105.50M	54.20M	133.50M	96.20M
	Operating Cash Flow
130.10M	122.70M	86.30M	182.10M	128.10M
	Investing Cash Flow
45.20M	-141.60M	-32.70M	-129.60M	-35.10M
	Financing Cash Flow
-132.00M	58.20M	-73.20M	-131.40M	-23.90M

Knowles Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 14.82
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KN, the sentiment is Neutral. The current price of 14.82 is above the 20-day moving average (MA) of 14.54, below the 50-day MA of 15.90, and below the 200-day MA of 17.80, indicating a neutral trend. The MACD of -0.43 indicates Negative momentum. The RSI at 48.30 is Neutral, neither overbought nor oversold. The STOCH value of 65.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KN.

Knowles Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITRN	80 Outperform	$663.45M	12.37	29.83%	5.10%	5.09%	12.45%
DGII	68 Neutral	$977.46M	27.99	6.29%	―	-4.49%	119.80%
HLIT	66 Neutral	$1.01B	26.43	8.69%	―	11.65%	-55.58%
Sector *	59 Neutral	$9.97B	10.09	-6.54%	3.08%	7.41%	-11.60%
KN	55 Neutral	$1.26B	―	-26.50%	―	-3.04%	-433.94%
NTGR	55 Neutral	$632.05M	56.63	2.30%	―	-8.65%	―
VSAT	51 Neutral	$1.05B	―	-8.49%	―	19.02%	76.67%

Knowles Corporate Events

Knowles Grants Special Equity Award to CEO

On February 18, 2025, Knowles Corporation’s Board of Directors and Compensation Committee granted a special equity award of performance share units (PSUs) to CEO Jeffrey S. Niew, under the company’s 2018 Equity and Cash Incentive Plan. This award, designed to align with the company’s strategic goals, is contingent upon achieving specific financial targets over a three-year performance period, with potential adjustments based on revenue from acquisitions and performance metrics. The PSU award aims to incentivize leadership to meet or exceed these targets, impacting the company’s operational focus and potentially enhancing shareholder value.

Knowles Boosts Stock Repurchase Program by $150 Million

On February 13, 2025, Knowles Corporation announced that its Board of Directors has approved an additional $150 million to its stock repurchase program, totaling approximately $194 million available for repurchases. The company reported a 21% increase in full-year revenue for 2024 and has completed the divestiture of its Consumer MEMS Microphone business, aligning its focus on industrial technology. The addition to the stock repurchase program is seen as a step toward enhancing shareholder value, while the company anticipates revenue growth in the Medical and Defense markets and benefits from a large order in the energy sector.