Long-established in the Hardware industry, Knowles Corp (KN, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 6.42%, juxtaposed with a three-month change of -15.24%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Knowles Corp.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 5/10
- Growth rank: 0/10
- GF Value rank: 7/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned Knowles Corp the GF Score of 68 out of 100, which signals poor future outperformance potential.
Knowles Corp: A Snapshot
Knowles Corp is engaged in the manufacturing of micro-acoustic microphones and balanced armature speakers, audio solutions, high-performance capacitors, and radio frequency filtering products. It operates in three segments; the Precision Devices segment specializes in the design and delivery of high-performance capacitor products and RF solutions, Medtech & Specialty Audio segment designs and manufactures microphones and balanced armature speakers used in applications and the Consumer MEMS Microphones segment designs and manufactures micro-electro-mechanical systems microphones and audio solutions used in applications. The majority of its revenue comes from the Consumer MEMS Microphones segment.
Knowles Corp's low Profitability rank can also raise warning signals. Knowles Corp's Operating Margin has declined over the past five years ((-10.64%)), as shown by the following data: 2018: 9.61; 2019: 10.00; 2020: 6.12; 2021: 13.86; 2022: 8.59. Additionally, Knowles Corp's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 39.01; 2019: 38.37; 2020: 35.48; 2021: 41.41; 2022: 36.13. This trend underscores the company's struggles to convert its revenue into profits.
A lack of significant growth is another area where Knowles Corp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by -3.1 per year over the past three years, which underperforms worse than 70.93% of 2336 companies in the Hardware industry. Stagnating revenues may pose concerns in a fast-evolving market. Lastly, Knowles Corp predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Knowles Corp has a strong history, its current metrics suggest that it may struggle to maintain this performance in the future. As value investors, it's crucial to consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen