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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.

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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

2. Knowles Q1 2026: Solid Growth, Margins Up, and a Bright Outlook

Knowles Corporation delivered a robust Q1 2026 performance, with revenue climbing 16% to $153 million and EPS rising 50% to $0.27, surpassing the $0.23 consensus. Gross margins strengthened across both Medtech & Specialty Audio (53.5%) and Precision Devices (39.2%), reflecting disciplined cost control and pricing power.

Publication Date: Apr -27

📋 Highlights

Revenue and Earnings

Total revenue hit $153 million, up 16% YoY, driven by Medtech & Specialty Audio’s $68 million (14% growth) and Precision Devices’ $85 million (17% growth). EPS of $0.27 beat expectations, underscoring the company’s ability to convert higher top-line sales into shareholder value.

Segment Performance

Medtech & Specialty Audio remains a growth engine, with 2–4% annual expansion projected, while Precision Devices is poised for 6–8% growth, fueled by defense, industrial, and electrification demand. The 80% front‑end utilization in PD signals robust capacity use and future margin upside.

Margin Dynamics

Gross margins improved to 53.5% in Medtech & Specialty Audio and 39.2% in Precision Devices, with PD margins expected to lift an additional 100 basis points by year‑end. The company’s disciplined pricing cadence (2–4% annual increases) helps offset modest input cost rises.

Growth Outlook

Guidance for Q2 2026 forecasts revenue of $152–$162 million, 8% YoY, and adjusted EBIT margins of 20–22%. EPS is projected at $0.28–$0.32, a 25% YoY increase at the midpoint. The firm anticipates 10–14% annual EBITDA growth, underpinned by a strong order pipeline.

Balance Sheet and Capital Structure

Knowles maintains a solid balance sheet with $41 million cash, $131 million of revolving credit, and a net leverage of 0.6x. With a free cash flow yield of 2.79% and ROIC of 7.53%, the company is well positioned to fund growth and return capital.

Pipeline and Market Dynamics

New design wins across all end markets, including defense and electrification, bolster future revenue. The company’s energy ramp is on track, and RF filter exposure to satellites offers high-margin opportunities. With a book‑to‑bill ratio of 1.19, demand remains strong, and the firm plans regular price increases to cover cost inflation. [1]

3. NewsRoom

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Are You Looking for a Top Momentum Pick? Why Knowles (KN) is a Great Choice

Apr -30

Source: zacks.com

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Knowles Corporation (KN) Q1 2026 Earnings Call Transcript

Apr -24

Source: seekingalpha.com

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Knowles (KN) Beats Q1 Earnings and Revenue Estimates

Apr -23

Source: zacks.com

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Phocas Financial Corp. Makes New Investment in Knowles Corporation $KN

Apr -06

Source: defenseworld.net

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Dimensional Fund Advisors LP Trims Stock Position in Knowles Corporation $KN

Mar -12

Source: defenseworld.net

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Knowles Q4 Earnings Call Highlights

Feb -08

Source: defenseworld.net

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Knowles Corporation (KN) Q4 2025 Earnings Call Transcript

Feb -05

Source: seekingalpha.com

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Knowles Corp. President and CEO Sells $1.2 Million Worth of Shares After 24% Gain

Jan -30

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

Strength

Weaknesses

Opportunities

Threats

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

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Knowles

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A-Score: 3.3/10

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

31.65$

Current Price

31.65$

Potential

-0.00%

Expected Cash-Flows