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Knowles Corp (KN)
NYSE:KN
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Knowles
(NYSE:KN)
57Neutral
Positive Factors
New Orders
Management highlighted a new $75M order with an energy customer with revenue contribution starting in 2026.
Share Repurchase Program
The Board authorized the addition of $150 million to KN's existing share repurchase program, bringing the total authorized to $194 million.
Transformation and Growth
Knowles has been able to undergo a radical transformation, removing what used to be a key, core low growth and low margin business and expanding into more attractive segments which are higher margin and higher growth.
Negative Factors
Excess Inventory
Inventory accumulation remains a problem in the industrial end market, with about three months of excess inventory in the channel.
Manufacturing Challenges
Knowles posted worse results and guidance as manufacturing challenges delayed shipments of specialty film capacitors.
Revenue Shortfall
The revenue shortfall in 4Q is due to a slower-than-expected ramp of a specialty film capacitor facility associated with the Cornell acquisition.
Knowles (KN) vs. S&P 500 (SPY)
Market Cap
$1.18B
Dividend YieldN/A
Average Volume (3M)889.25K
Price to Earnings (P/E)―
Beta (1Y)1.59
Revenue Growth-3.04%
EPS Growth-433.94%
CountryUS
Employees5,500
SectorTechnology
Sector Strength39
IndustryCommunication Equipment
Share Statistics
EPS (TTM)-2.68
Shares Outstanding87,689,674
10 Day Avg. Volume787,595
30 Day Avg. Volume889,247
Financial Highlights & Ratios
PEG RatioN/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 Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$20.33Price Target Upside50.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Knowles Business Overview & Revenue Model
Company DescriptionKnowles Corporation is a global leader in the design and manufacture of advanced micro-acoustic microphones, speakers, voice processing, and precision device solutions. Operating primarily in the consumer electronics and hearing health sectors, Knowles provides high-performance audio solutions to mobile, ear, and IoT markets, as well as offering precision products for the communications, medtech, and automotive industries.
How the Company Makes MoneyKnowles 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.55
Neutral
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.62
Positive
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.68
Positive
| 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
Negative
13.47
Price Trends
17.14
Negative
18.33
Negative
17.99
Negative
Market Momentum
-0.51
Positive
27.41
Positive
12.32
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KN, the sentiment is Negative. The current price of 13.47 is below the 20-day moving average (MA) of 15.84, below the 50-day MA of 17.14, and below the 200-day MA of 17.99, indicating a bearish trend. The MACD of -0.51 indicates Positive momentum. The RSI at 27.41 is Positive, neither overbought nor oversold. The STOCH value of 12.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KN.
Knowles Risk Analysis
Knowles disclosed 23 risk factors in its most recent earnings report. Knowles reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Knowles Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $27.83B | 15.89 | 68.78% | 1.06% | 21.20% | 311.29% | |
71 Outperform | $98.79B | 63.52 | 4.43% | 2.07% | -19.28% | -44.00% | |
67 Neutral | $14.99B | 9.79 | 18.97% | ― | -14.19% | -27.42% | |
65 Neutral | $149.41B | 31.60 | 28.25% | 3.24% | -10.72% | -26.60% | |
57 Neutral | $20.94B | 10.43 | -13.41% | 2.52% | 4.53% | -23.34% | |
57 Neutral | $1.18B | ― | -26.50% | ― | -3.04% | -433.94% | |
45 Neutral | $985.98M | ― | -40.78% | ― | -48.00% | -227.62% |
* Technology Sector Average
Performance Comparison
KN
Knowles
13.47
-2.49
-15.60%
ADI
Analog Devices
180.88
-7.94
-4.21%
MXL
Maxlinear
10.21
-12.49
-55.02%
MPWR
Monolithic Power
498.68
-139.55
-21.87%
ON
ON Semiconductor
35.56
-33.54
-48.54%
TXN
Texas Instruments
164.20
0.26
0.16%
Knowles Earnings Call Summary
Earnings Call Date: Feb 13, 2025 | % Change Since: -26.19% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with significant annual revenue and EPS growth, strong cash flow, and a major order in the energy sector as key positives. However, challenges in specialty film capacitor production, pricing pressure, tariff exposure, and cautious Q1 2025 revenue guidance present notable concerns.Highlights
Full Year Revenue and EPS Growth
For the full year 2024, revenue grew 21% and non-GAAP diluted EPS grew 32% from 2023 levels, driven by strength in MedTech and specialty audio.
Strong Cash Flow and Share Buyback Program
Generated $130 million in cash from operating activities for the full year 2024. The board authorized an additional $150 million in capacity for share repurchases.
Significant Order in the Energy Sector
Received an order for more than $75 million from a new customer in the energy sector, with at least $25 million of this order expected to ship in 2026.
Positive Book-to-Bill Trend in Precision Devices
The distribution book-to-bill trend was positive in Q4, with strong bookings in medical and defense markets.
Lowlights
Production Challenges in Specialty Film Capacitors
Challenges with plant consolidation and ramping production of new products in the specialty film capacitor line resulted in a greater than $3 million shortfall in Q4 shipment plans.
Pricing Pressure in MedTech and Specialty Audio
Gross margins in the MedTech and Specialty Audio segment were down 130 basis points year-over-year due to lower average pricing on mature products and higher factory costs.
Tariff Exposure
Approximately 5% of 2024 revenue could be subject to tariffs on importing goods from China or Mexico, although efforts are in place to mitigate this impact.
Q1 2025 Revenue Guidance
Revenues for Q1 2025 are expected to be between $124 million and $134 million, indicating a potential decrease from Q4 2024 revenues.
Company Guidance
During the Knowles Corporation fourth quarter and full-year 2024 earnings call, several key metrics and guidance were provided. The company reported Q4 revenue of $143 million, which was within the guided range, and a non-GAAP diluted EPS of $0.27. For the full year, revenue grew by 21% and non-GAAP diluted EPS increased by 32% compared to 2023, driven by strong performance in the MedTech and specialty audio segments. The Precision Devices segment saw a 4% year-over-year revenue growth in Q4, although faced challenges with a $3 million shortfall due to plant consolidation issues. For Q1 2025, Knowles expects revenues between $124 million and $134 million, with EPS projected to range from $0.16 to $0.20. The company anticipates continued revenue and EPS growth in 2025, supported by a strong order backlog, including a new $75 million order in the energy sector, and the strategic sale of its consumer MEMS microphone business. Additionally, the board authorized a $150 million increase in the stock repurchase plan, highlighting robust cash flow and a strong balance sheet.Knowles Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Knowles Grants Special Equity Award to CEO
Positive
Feb 25, 2025
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.
M&A TransactionsStock BuybackBusiness Operations and StrategyFinancial Disclosures
Knowles Boosts Stock Repurchase Program by $150 Million
Positive
Feb 13, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.