Knowles Corporation (KN) | Investment Case

1. Company Snapshot

1.a. 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.

Show Full description

1.b. Last Insights on KN

Knowles Corporation's recent performance has been negatively impacted by a sell-off in the stock, with shares trading down to the low-$16 range from nearly $20 a few months ago. This decline is largely driven by non-fundamental news, with sales and margins experiencing increasing stability. The company's recent Q4 2024 earnings call did not provide any significant negative surprises, with management presenting a solid review of the business. However, the upcoming virtual Investor Day on May 13, 2025, may provide further insight into the company's growth prospects and potentially lead to increased volatility in the stock.

1.c. Company Highlights

Last Price	23.37
Change Percentage	-0.17%
Open	23.35
Previous Close	23.41
Market Cap ( Millions)	1991
Volume	602951
Year High	24.54
Year Low	12.19
M A 50	22.95
M A 200	19.14

FCF Yield	4.11%
Dividend Yield	0.00%
ROE	5.22%
Debt / Equity	26.20%
Net Debt / EBIDTA	109.31%
Price To Book	2.67
Price Earnings Ratio	51.02
Price To FCF	24.33
Price To sales	3.47
EV / EBITDA	21.91

2. Knowles' Q3 2025 Earnings: Strong Revenue and EPS Growth

The company reported a strong financial performance in Q3 2025, with revenue reaching $153 million, up 7% year-over-year, and EPS of $0.33, up 22% year-over-year. The revenue growth was driven by a 2% increase in Medtech & Specialty Audio to $65 million and a 12% rise in Precision Devices segment revenue to $88 million. The EPS beat was notable, although it was slightly below estimates of $0.3525. Cash generated by operating activities was $29 million, at the high end of the guidance range.

Publication Date: Oct -28

                                    📋 Highlights
                                    Revenue Growth & EPS Outperformance:
                                                Q3 2025 revenue reached $153 million (+7% YoY), with EPS at $0.33 (+22% YoY), both at the high end of guidance.
Segment Performance:
                                                Precision Devices revenue rose 12% YoY to $88 million, while Medtech & Specialty Audio grew 2% YoY to $65 million.
Q4 Guidance:
                                                Revenue projected between $151–$161 million (+9% midpoint YoY), with adjusted EBITDA margin targeting 22–24%.
Specialty Film Expansion:
                                                Specialty film line projected at $25–$30 million in 2025, with potential to reach $55–$60 million in 2026.
Design Wins & New Markets:
                                                Strong EV design wins and prototyping for downhole applications in fracking/drain cleaning, leveraging specialized capacitors.

                                

Segment Performance

The Precision Devices segment was a key driver of growth, with revenue increasing by 12% year-over-year to $88 million. The Medtech & Specialty Audio segment also saw a 2% increase in revenue to $65 million. According to Jeffrey Niew, "We saw revenue growth across all our end markets: medtech, defense, industrial, and EV and energy." This broad-based growth indicates a strong underlying demand for the company's products.

Outlook and Guidance

The company expects to finish the year strong, with revenue and EPS growth accelerating in the second half of 2025. For Q4 2025, revenues are expected to be between $151 million and $161 million, up 9% at the midpoint year-over-year. The guidance for R&D expenses and selling and administrative expenses is $8-10 million and $26-28 million, respectively. The adjusted EBITDA margin is expected to be within the range of 22% to 24%.

Valuation and Growth Prospects

With a P/E Ratio of 47.83 and an EV/EBITDA of 7.19, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 5.9%, which is within the company's stated range of 4-6%. The company's focus on being "picky with acquisitions to ensure they make sense and provide value" suggests a disciplined approach to M&A, which could help drive long-term growth. The ROIC of 3.6% and ROE of 5.75% indicate a relatively efficient use of capital.

Operational Highlights

The company's specialty film line saw improved output and capacity utilization in Q3, leading to sequential improvement in gross margins. The variable contribution margin is higher than the gross margin, and 35-40% of incremental revenue is expected to drop to the bottom line. The book-to-bill ratio within PD was 1 for the quarter, indicating a healthy demand environment. The high backlog and strong bookings, particularly in defense and with distribution partners, are positive indicators for future growth.

3. NewsRoom

AE Wealth Management LLC Purchases 4,901 Shares of Knowles Corporation $KN

Nov -17

Source: defenseworld.net

Knowles Corporation $KN Shares Sold by Teacher Retirement System of Texas

Nov -06

Source: defenseworld.net

Oppenheimer Asset Management Inc. Purchases 10,672 Shares of Knowles Corporation $KN

Nov -02

Source: defenseworld.net

Mutual of America Capital Management LLC Cuts Stock Position in Knowles Corporation $KN

Oct -31

Source: defenseworld.net

Knowles Corporation (KN) Q3 2025 Earnings Call Transcript

Oct -23

Source: seekingalpha.com

Syntiant Wins Octane's High Tech Award for ‘Deal of the Year'

Sep -29

Source: globenewswire.com

Knowles Corporation: Q2 Proof Point Validates Margin Recovery

Sep -26

Source: seekingalpha.com

Knowles Revenue Jumps 8 Percent in Q2

Jul -25

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Consumer Micro-electro-mechanical Systems Microphone

Expected Growth: 4%

The 4% growth of Consumer Micro-electro-mechanical Systems Microphone from Knowles Corporation is driven by increasing demand for high-quality audio in smartphones, growing adoption of voice assistants, and rising sales of True Wireless Stereo (TWS) earbuds. Additionally, advancements in MEMS technology and Knowles' strong market position contribute to the segment's growth.

MedTech & Specialty Audio

Expected Growth: 4%

Knowles Corporation's MedTech segment growth is driven by increasing demand for hearing health and diagnostic solutions, while Specialty Audio growth is fueled by rising adoption of true wireless stereo (TWS) earbuds and expansion in emerging markets, such as Asia and Latin America.

Precision Devices

Expected Growth: 4%

Knowles Corporation's Precision Devices segment growth is driven by increasing demand for high-performance audio solutions in premium smartphones, growing adoption of true wireless stereo earbuds, and rising need for advanced acoustic components in IoT devices, augmented reality/virtual reality applications, and electric vehicles.

7. Detailed Products

Acoustic Products

Knowles Corporation's acoustic products include micro-acoustic components such as microphones, receivers, and speakers that are used in various applications such as smartphones, tablets, and laptops.

Audio Solutions

Knowles Corporation's audio solutions include audio processing algorithms, audio amplifiers, and audio codecs that are used in various applications such as hearing aids, headphones, and smart home devices.

MEMS Microphones

Knowles Corporation's MEMS (Micro-Electro-Mechanical Systems) microphones are used in various applications such as smartphones, tablets, and laptops to capture high-quality audio.

Specialty Components

Knowles Corporation's specialty components include capacitors, resistors, and inductors that are used in various applications such as automotive, industrial, and medical devices.

Hearing Health

Knowles Corporation's hearing health products include hearing aids, cochlear implants, and audiological diagnostic equipment.

8. Knowles Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Knowles Corporation is moderate due to the presence of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is low for Knowles Corporation due to the lack of concentration of buyers in the market.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate for Knowles Corporation due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants is high for Knowles Corporation due to the low barriers to entry in the market.

Intensity Of Rivalry

The intensity of rivalry is high for Knowles Corporation due to the presence of many competitors in the market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	21.09%
Debt Cost	3.95%
Equity Weight	78.91%
Equity Cost	11.31%
WACC	9.75%
Leverage	26.72%

11. Quality Control: Knowles Corporation passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Digi

A-Score: 5.2/10

Value: 3.3

Growth: 6.7

Quality: 7.8

Yield: 0.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

Knowles

A-Score: 4.3/10

Value: 3.6

Growth: 1.4

Quality: 6.3

Yield: 0.0

Momentum: 8.0

Volatility: 6.3

1-Year Total Return ->

ADTRAN Holdings

A-Score: 4.1/10

Value: 5.7

Growth: 3.4

Quality: 2.4

Yield: 1.0

Momentum: 9.0

Volatility: 3.0

1-Year Total Return ->

Clearfield

A-Score: 3.3/10

Value: 2.4

Growth: 4.2

Quality: 4.5

Yield: 0.0

Momentum: 5.0

Volatility: 3.7

1-Year Total Return ->

Iteris

A-Score: 3.2/10

Value: 1.0

Growth: 7.0

Quality: 4.8

Yield: 0.0

Momentum: 5.0

Volatility: 1.3

1-Year Total Return ->

AmpliTech

A-Score: 2.9/10

Value: 7.4

Growth: 1.7

Quality: 3.2

Yield: 0.0

Momentum: 5.0

Volatility: 0.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

8.09%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.75%

Knowles Corporation - US49926D1090

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on KN

1.c. Company Highlights

Less Volatile

Average Growth

Average Quality

Earnings Beats

Earnings Miss

Fairly Valued

Lower Growth

Revenues Miss

Revenues Beats

Medium Volatility

Stable Momentum

2. Knowles' Q3 2025 Earnings: Strong Revenue and EPS Growth

Segment Performance

Outlook and Guidance

Valuation and Growth Prospects

Operational Highlights

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Consumer Micro-electro-mechanical Systems Microphone

Expected Growth: 4%

MedTech & Specialty Audio

Expected Growth: 4%

Precision Devices

Expected Growth: 4%

7. Detailed Products

Acoustic Products

Audio Solutions

MEMS Microphones

Specialty Components

Hearing Health

8. Knowles Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Knowles Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.37$

Current Price

23.37$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA