We assign a fundamental rating of 5 out of 10 to KE. KE was compared to 124 industry peers in the Electronic Equipment, Instruments & Components industry. KE is in great health and has no worries on liquidiy or solvency at all, but the profibility rating is only average. KE has a correct valuation and a medium growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

KE had positive earnings in the past year.
In the past year KE had a positive cash flow from operations.
In the past 5 years KE has always been profitable.
The reported operating cash flow has been mixed in the past 5 years: KE reported negative operating cash flow in multiple years.

1.2 Ratios

KE has a Return On Assets of 2.22%. This is comparable to the rest of the industry: KE outperforms 58.87% of its industry peers.
The Return On Equity of KE (4.14%) is comparable to the rest of the industry.
KE has a Return On Invested Capital of 6.03%. This is in the better half of the industry: KE outperforms 62.90% of its industry peers.
The Average Return On Invested Capital over the past 3 years for KE is in line with the industry average of 8.83%.

		Industry Rank	Sector Rank
ROA	2.22%
ROE	4.14%
ROIC	6.03%

ROA(3y)2.56%

ROA(5y)3.53%

ROE(3y)5.8%

ROE(5y)7.42%

ROIC(3y)7.03%

ROIC(5y)7.46%

1.3 Margins

With a Profit Margin value of 1.62%, KE perfoms like the industry average, outperforming 53.23% of the companies in the same industry.
In the last couple of years the Profit Margin of KE has declined.
KE has a Operating Margin of 4.04%. This is comparable to the rest of the industry: KE outperforms 59.68% of its industry peers.
In the last couple of years the Operating Margin of KE has grown nicely.
KE has a Gross Margin of 7.42%. This is amonst the worse of the industry: KE underperforms 83.87% of its industry peers.
KE's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	4.04%
PM (TTM)	1.62%
GM	7.42%

OM growth 3Y-1.3%

OM growth 5Y1.84%

PM growth 3Y-20.97%

PM growth 5Y-5.52%

GM growth 3Y-3.24%

GM growth 5Y0.12%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

KE has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
KE has less shares outstanding than it did 1 year ago.
KE has less shares outstanding than it did 5 years ago.
The debt/assets ratio for KE has been reduced compared to a year ago.

2.2 Solvency

KE has an Altman-Z score of 3.32. This indicates that KE is financially healthy and has little risk of bankruptcy at the moment.
KE has a Altman-Z score (3.32) which is in line with its industry peers.
The Debt to FCF ratio of KE is 1.19, which is an excellent value as it means it would take KE, only 1.19 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 1.19, KE belongs to the best of the industry, outperforming 81.45% of the companies in the same industry.
A Debt/Equity ratio of 0.23 indicates that KE is not too dependend on debt financing.
KE has a Debt to Equity ratio (0.23) which is in line with its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.23
Debt/FCF	1.19
Altman-Z	3.32

ROIC/WACC0.44

WACC13.61%

2.3 Liquidity

KE has a Current Ratio of 2.21. This indicates that KE is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 2.21, KE is in line with its industry, outperforming 46.77% of the companies in the same industry.
A Quick Ratio of 1.34 indicates that KE should not have too much problems paying its short term obligations.
KE has a Quick ratio (1.34) which is in line with its industry peers.

		Industry Rank	Sector Rank
Current Ratio	2.21
Quick Ratio	1.34

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 13.93% over the past year.
Measured over the past years, KE shows a decrease in Earnings Per Share. The EPS has been decreasing by -1.15% on average per year.
Looking at the last year, KE shows a very negative growth in Revenue. The Revenue has decreased by -29.24% in the last year.
The Revenue has been growing slightly by 4.37% on average over the past years.

EPS 1Y (TTM)13.93%

EPS 3Y-2.27%

EPS 5Y-1.15%

EPS Q2Q%122.73%

Revenue 1Y (TTM)-29.24%

Revenue growth 3Y3.28%

Revenue growth 5Y4.37%

Sales Q2Q%-2.31%

3.2 Future

The Earnings Per Share is expected to grow by 15.74% on average over the next years. This is quite good.
Based on estimates for the next years, KE will show a small growth in Revenue. The Revenue will grow by 0.94% on average per year.

EPS Next Y18.2%

EPS Next 2Y15.74%

EPS Next 3YN/A

EPS Next 5YN/A

Revenue Next Year-2.7%

Revenue Next 2Y0.94%

Revenue Next 3YN/A

Revenue Next 5YN/A

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 21.31 indicates a rather expensive valuation of KE.
Compared to the rest of the industry, the Price/Earnings ratio of KE indicates a somewhat cheap valuation: KE is cheaper than 79.03% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.21, KE is valued a bit cheaper.
KE is valuated rather expensively with a Price/Forward Earnings ratio of 19.74.
KE's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. KE is cheaper than 71.77% of the companies in the same industry.
KE's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 24.26.

		Industry Rank	Sector Rank
PE	21.31
Fwd PE	19.74

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, KE is valued cheaper than 93.55% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of KE indicates a rather cheap valuation: KE is cheaper than 95.16% of the companies listed in the same industry.

		Industry Rank	Sector Rank
P/FCF	6.23
EV/EBITDA	8.44

4.3 Compensation for Growth

KE's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
KE's earnings are expected to grow with 15.74% in the coming years. This may justify a more expensive valuation.