Knowles (KN) Expands RF Lineup On A Valuation Story That Is Still Up For Debate

Knowles unveils ATT A-Series attenuators

Knowles (KN) has introduced its ATT A-Series attenuators, a new line of compact RF components aimed at designers who need precise, rugged, and space-efficient signal control for demanding electronic systems.

Investors have already been pricing in a stronger RF story at Knowles, with the share price up 71.12% year to date and the 3 year total shareholder return at 172.77%. However, momentum has cooled slightly with a 6.22% 7 day share price pullback after recent gains.

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After a 71% year-to-date run and a recent pullback, Knowles now sits in a grey zone for investors weighing fresh RF upside against the risk of chasing the move. The key question is whether the current valuation still leaves enough reward on the table.

Most Popular Narrative: 22% Undervalued

Knowles is trading at a last close of $37.56, while the most followed narrative anchors fair value at $48.00. This frames the current pullback as a potential entry test rather than a clear peak in the RF story.

The assumed bullish price target for Knowles is $48.0, which represents up to two standard deviations above the consensus price target of $43.75. This valuation is based on what can be assumed as the expectations of Knowles's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.

See why 2 investors see Knowles as 22% undervalued.

Result: Fair Value of $48.00 (UNDERVALUED)

Still, the bullish Knowles narrative can break if the recent five year revenue declines reassert themselves, or if insider selling and earlier share gains trigger a valuation reset.

Find out about the key risks to this Knowles narrative.

Another View on Knowles valuation

The bullish narrative pins Knowles at a fair value of $48.00, yet the SWS DCF model points in the opposite direction. On that cash flow based view, the stock at $37.56 screens as expensive versus an estimated value of $11.56. That is a wide gap. Which lens do you trust more for a long term position?

For a closer look at how this cash flow view is built and what would need to change for the numbers to meet in the middle, Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Knowles for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 29 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the split views on Knowles leave you uncertain, move quickly from headline narratives to the underlying data and test the numbers for yourself, starting with the 2 key rewards.

Ready for more investment ideas beyond Knowles?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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