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ON Semiconductor Corp ON

Morningstar Rating
$76.97 −0.60 (0.77%)
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Company Report

Onsemi Earnings: Long-Term Growth Thesis Intact Despite Soft 2024, and Shares Remain Undervalued

We maintain our $94 fair value estimate for shares of narrow-moat Onsemi as we trim our 2024 sales forecast but maintain our long-term growth thesis. Onsemi’s fourth-quarter results met our expectations, but first-quarter guidance came in below our model. 2024 looks set to be a year of soft demand across both the automotive and industrial end markets, which should weigh on the firm’s performance in the short term. Nevertheless, we appreciate Onsemi’s strong profitability, even in a downturn, and continue to forecast strong growth over the next five years as the firm benefits from trends toward electrification and rising content in cars. Shares rose as much as 9% intraday after Onsemi reported results, likely due to a more modest decline in first-quarter guidance than the market feared. We continue to see further upside for long-term investors.

Price vs Fair Value

ON is trading at a 18% discount.
Price
$76.97
Fair Value
$81.00
Uncertainty
High
1-Star Price
$157.50
5-Star Price
$11.50
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Onsemi’s image sensors are best of breed in the automotive market, with a leading market share in high-growth, mission-critical applications like ADAS.

Bears

Despite its business transition, we still see Onsemi being prone to cyclicality that can negatively impact its sales and margin profile.

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News

Trading Information

Previous Close Price
$77.57
Day Range
$76.9779.81
52-Week Range
$61.47111.35
Bid/Ask
$76.92 / $77.41
Market Cap
$32.89 Bil
Volume/Avg
4.9 Mil / 7.0 Mil

Key Statistics

Price/Earnings (Normalized)
14.72
Price/Sales
4.17
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
1.72%

Company Profile

Onsemi is a supplier of power semiconductors and sensors focused on the automotive and industrial markets. Onsemi is the second-largest power chipmaker in the world and the largest supplier of image sensors to the automotive market. While the firm used to be highly vertically integrated, it now pursues a hybrid manufacturing strategy for flexible capacity. Onsemi is pivoting to focus on emerging applications like electric vehicles, autonomous vehicles, industrial automation, and renewable energy.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Mid Core
Total Number of Employees
30,100

Competitors

Valuation

Metric
ON
NXPI
IFNNY
Price/Earnings (Normalized)
14.7217.5113.92
Price/Book Value
4.227.312.76
Price/Sales
4.174.842.82
Price/Cash Flow
12.1115.719.43
Price/Earnings
ON
NXPI
IFNNY

Financial Strength

Metric
ON
NXPI
IFNNY
Quick Ratio
1.571.200.86
Current Ratio
2.711.911.84
Interest Coverage
33.668.2329.58
Quick Ratio
ON
NXPI
IFNNY

Profitability

Metric
ON
NXPI
IFNNY
Return on Assets (Normalized)
17.76%15.37%11.03%
Return on Equity (Normalized)
32.34%44.97%20.22%
Return on Invested Capital (Normalized)
21.53%19.74%14.11%
Return on Assets
ON
NXPI
IFNNY
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