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Renesas Electronics Corporation (JP:6723)
:6723
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Renesas Electronics
(OTC:6723)
71Outperform
Positive Factors
Automotive Segment Performance
The automotive segment experienced a 10.3% y/y increase in revenue, showing strong performance in this area.
Profitability Improvement
Improving profitability in recent years, partly due to change in product mix, has driven a significant turnaround, with profitability improving substantially in 2023.
Negative Factors
EBITDA and Revenue Decline
3Q24 EBITDA declined by 31.1% y/y, driven by a 9% revenue drop, falling short of expectations.
Guidance and Outlook Concerns
3Q24 guidance disappoints, c.10% below consensus as outlook for both key segments – industrial and automotive, remains cautious.
Inventory and Demand Challenges
Elevated inventory levels and weaker end demand have resulted in a delayed recovery.
Renesas Electronics (6723) vs. S&P 500 (SPY)
Market Cap
$3.15T
Dividend Yield1.57%
Average Volume (3M)13.64M
Price to Earnings (P/E)18.1
Beta (1Y)1.61
Revenue Growth-10.70%
EPS Growth-47.63%
CountryJP
Employees21,204
SectorTechnology
Sector Strength57
IndustrySemiconductors
Share Statistics
EPS (TTM)92.22
Shares Outstanding1,870,614,900
10 Day Avg. Volume14,504,830
30 Day Avg. Volume13,636,150
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
Price to Cash Flow (P/CF)N/A
P/FCF RatioN/A
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$2,803.16Price Target Upside57.97% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Renesas Electronics Business Overview & Revenue Model
Company DescriptionRenesas Electronics Corporation is a global leader in the semiconductor industry, headquartered in Tokyo, Japan. The company specializes in the design and manufacturing of microcontrollers, system-on-chip (SoC) solutions, and a wide array of analog and power devices. Renesas serves a diverse range of sectors including automotive, industrial, infrastructure, and the Internet of Things (IoT), providing cutting-edge solutions that enhance the performance, efficiency, and connectivity of electronic devices.
How the Company Makes MoneyRenesas Electronics generates revenue primarily through the sale of its semiconductor products, which are crucial components in a variety of electronic devices. The company's key revenue streams include microcontrollers, which are widely used in automotive and industrial applications, and analog and power devices that are essential for power management and connectivity in electronic systems. Renesas also benefits from strategic partnerships and collaborations that expand its market reach and enhance its product offerings. Additionally, the company invests in research and development to innovate and maintain a competitive edge in the fast-evolving technology landscape.
Renesas Electronics Financial Statement Overview
Summary
Income Statement
Balance Sheet
Cash Flow
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.35T | 1.47T | 1.50T | 994.42B | 715.67B | Gross Profit |
| 749.80B | 723.55B | 853.99B | 496.40B | 335.69B | EBIT |
| 222.32B | 368.31B | 424.17B | 183.60B | 65.14B | EBITDA |
| 433.70B | 589.90B | 559.70B | 299.85B | 214.29B | Net Income Common Stockholders |
| 219.08B | 337.09B | 256.62B | 119.54B | 45.63B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 229.25B | 434.68B | 342.76B | 222.66B | 220.39B | Total Assets |
| 4.49T | 3.17T | 2.81T | 2.41T | 1.61T | Total Debt |
| 1.42T | 667.66B | 755.74B | 814.09B | 679.74B | Net Debt |
| 1.19T | 232.98B | 419.68B | 592.16B | 459.96B | Total Liabilities |
| 1.95T | 1.16T | 1.27T | 1.24T | 989.32B | Stockholders Equity |
| 2.54T | 2.00T | 1.53T | 1.16T | 616.70B |
| Cash Flow | Free Cash Flow | |||
| 210.59B | 367.50B | 391.13B | 255.04B | 185.70B | Operating Cash Flow |
| 340.48B | 496.63B | 479.32B | 307.38B | 223.89B | Investing Cash Flow |
| -1.28T | -267.49B | -97.52B | -663.13B | -40.16B | Financing Cash Flow |
| 677.35B | -181.25B | -294.77B | 340.92B | -104.47B |
Renesas Electronics Technical Analysis
Neutral
1774.50
Price Trends
2126.88
Negative
2092.65
Negative
2201.84
Negative
Market Momentum
-129.29
Negative
47.75
Neutral
64.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6723, the sentiment is Neutral. The current price of 1774.5 is above the 20-day moving average (MA) of 1685.12, below the 50-day MA of 2126.88, and below the 200-day MA of 2201.84, indicating a neutral trend. The MACD of -129.29 indicates Negative momentum. The RSI at 47.75 is Neutral, neither overbought nor oversold. The STOCH value of 64.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:6723.
Renesas Electronics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $21.60T | 18.89 | 14.40% | 0.54% | 9.56% | 26.52% | |
72 Outperform | $4.45T | 10.79 | 7.87% | 3.35% | 0.24% | 37.62% | |
71 Outperform | $3.15T | 18.11 | 7.22% | 1.57% | -10.70% | -47.63% | |
70 Outperform | $3.70T | 10.93 | 7.23% | 2.41% | 1.72% | -33.60% | |
69 Neutral | ¥5.67T | 24.30 | 11.70% | 0.81% | -5.48% | -11.96% | |
59 Neutral | $10.74B | 10.21 | -6.69% | 3.04% | 7.44% | -10.92% | |
44 Neutral | ¥545.18B | ― | ― | -5.57% | 38.15% |
* Technology Sector Average
Performance Comparison
JP:6723
Renesas Electronics
1,774.50
-817.67
-31.54%
JP:6753
Sharp Corporation
839.70
8.70
1.05%
JP:6752
Panasonic
1,583.50
237.80
17.67%
JP:6902
DENSO
1,816.00
-793.79
-30.42%
JP:6758
Sony
3,535.00
933.94
35.91%
JP:6702
Fujitsu
3,080.00
667.08
27.65%
Renesas Electronics Earnings Call Summary
Earnings Call Date: Apr 24, 2025 | % Change Since: 9.10% | Next Earnings Date: Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with steady growth in certain segments like Data Center and AI, and completion of inventory correction. However, significant challenges remain due to revenue decline, tariff uncertainties, and decreased operating profit margin. The company remains cautious with a focus on long-term competitiveness amid uncertain market conditions.Highlights
Steady Growth in Data Center and AI Segments
Despite uncertainties, steady growth is expected in the Data Center and AI segments, especially for the second half with the DDR5 generation upgrade progressing.
Inventory Correction Completed
Inventory correction was nearly completed in Q1, with some gradual recovery observed.
Gross Margin Improvement
Gross margin improved by 2.7% due to better product mix and cost savings, with some unexpected benefits from cost reductions.
Positive Outlook for IIoT
IIoT segment showed a positive outlook with a 5.3% increase in device revenue excluding FX impact, mainly contributing to growth.
Automotive Segment Developments
Launch of the 28-nano MCU is expected to be strong, particularly in China, with robust adoption in EV, ADAS, and powertrain areas.
Lowlights
Revenue Decline Year-on-Year
Overall, there was a 12.2% decrease in revenue year-on-year, with a minus 16.8% when exchange impact is excluded.
Tariff Uncertainties
Tariff impacts are uncertain and could affect volumes and ASP negatively, leading to a conservative outlook.
Decreased Operating Profit Margin
Operating profit margin decreased due to increased R&D expenses and exchange impacts.
Challenges in Automotive Segment
Automotive operating margin decreased Q-on-Q, with uncertainties in demand and strategic changes among customers.
CapEx and Utilization Rate Concerns
CapEx continues with stronger control over expenditures and overall utilization rates expected to be flat amid factory adjustments.
Company Guidance
In the recent earnings call, Renesas Electronics Corporation provided guidance for the second quarter of FY 2025, highlighting several key metrics. The company reported a first-quarter revenue of JPY 308.8 billion, with a gross margin of 56.7% and an operating profit of JPY 83.8 million. The operating margin stood at 27.9%, and core net profit was JPY 73.3 billion. EBITDA for the quarter was JPY 103.5 million. In terms of currency, the yen was JPY 154 against the dollar and JPY 161 against the euro. Looking ahead, Renesas forecasted second-quarter revenue at JPY 302.0 billion, with a gross margin of 55.0% and an operating profit margin of 25%. The company remains cautious due to ongoing uncertainties around tariffs, which could impact both direct and indirect business operations. Despite these challenges, Renesas anticipates steady growth in sectors such as data centers and AI, particularly with the progression of DDR5 upgrades in the second half of the year.Renesas Electronics Corporate Events
Renesas Electronics Reports Decline in Q1 2025 Financial Results
Apr 24, 2025
Renesas Electronics reported a significant decline in its financial performance for the first quarter ended March 31, 2025, with a 12.2% decrease in revenue compared to the previous year. The company’s operating profit and profit before tax also saw substantial drops of 72.3% and 70.8%, respectively. This downturn reflects challenges in the semiconductor market, impacting Renesas’ profitability and market positioning. Despite these challenges, the company maintains its dividend forecast and continues to adjust its accounting estimates to better align with current market conditions.
Renesas Electronics Releases First Half 2025 Financial Forecasts Amid Market Volatility
Apr 24, 2025
Renesas Electronics announced its consolidated financial forecasts for the first half of 2025, highlighting the challenges of predicting full-year results due to semiconductor market volatility. The company provided non-GAAP figures to better reflect ongoing business performance, projecting revenue between 603,277 and 618,277 million yen, with gross and operating margins of 55.9% and 26.1% respectively. This forecast indicates a decrease compared to the same period in the previous year, reflecting market conditions and currency fluctuations, which may impact stakeholders and the company’s market positioning.
Renesas Electronics Strengthens Corporate Governance for Sustainable Growth
Mar 26, 2025
Renesas Electronics Corporation has reaffirmed its commitment to robust corporate governance, emphasizing transparency, agility, and innovation as core elements of its corporate culture. The company aims to maintain a sustainable future by enhancing its corporate governance structure to ensure transparent, fair, and decisive decision-making, thereby solidifying its position in the competitive semiconductor market.
Renesas Electronics Strengthens Board with New Outside Directors
Feb 28, 2025
Renesas Electronics has announced the election of several outside directors to enhance its board’s functionality and governance. The company emphasizes the importance of objectivity and transparency in its corporate governance, integrating sustainability initiatives into its operations. This move is expected to strengthen the board’s oversight capabilities and align with the company’s strategic goals.
Renesas Electronics Reinforces Corporate Governance and Culture for Sustainable Growth
Jan 31, 2025
Renesas Electronics Corporation has issued a corporate governance report outlining its commitment to maintaining sound relationships with stakeholders and fulfilling its social responsibilities. The company emphasizes transparency, agility, global perspective, innovation, and an entrepreneurial spirit as part of its corporate culture to enhance long-term corporate value and thrive in the competitive global semiconductor market.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.