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ON Semiconductor (ON)
NASDAQ:ON
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ON Semiconductor
(NASDAQ:ON)67Neutral
Positive Factors
Cost Reduction
Management is taking aggressive actions to reduce operating expenses and rationalize its manufacturing footprint to permanently remove costs from the business.
Long-term Prospects
Strong design win momentum is expected to support the company's long-term prospects despite current challenges.
Negative Factors
Demand Headwinds
The company faces near-term demand headwinds with limited customer visibility, particularly in the first half of the year.
Market Outlook
The silicon carbide market is expected to decline, with revenue anticipated to drop by 15-20% due to inventory headwinds.
ON Semiconductor (ON) vs. S&P 500 (SPY)
Market Cap
$18.75B
Dividend YieldN/A
Average Volume (3M)9.80M
Price to Earnings (P/E)12.2
Beta (1Y)1.17
Revenue Growth-14.19%
EPS Growth-27.42%
CountryUS
Employees26,400
SectorTechnology
Sector Strength48
IndustrySemiconductors and Equipment
Share Statistics
EPS (TTM)3.63
Shares Outstanding421,421,100
10 Day Avg. Volume11,096,820
30 Day Avg. Volume9,798,463
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.67
Price to Cash Flow (P/CF)8.20
P/FCF Ratio8.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$60.87Price Target Upside36.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering24
ON Semiconductor Business Overview & Revenue Model
Company DescriptionON Semiconductor Corporation, commonly referred to as ON Semiconductor, is a leading provider of semiconductor-based solutions. The company operates in various sectors including automotive, industrial, and communications. ON Semiconductor designs and manufactures a broad range of products such as power management devices, sensors, and custom solutions that enable high-performance, energy-efficient electronics. These products are essential components in a wide array of applications including electric vehicles, factory automation, and data centers.
How the Company Makes MoneyON Semiconductor generates revenue primarily through the sale of its semiconductor products and solutions across multiple industries. The company's key revenue streams include the automotive sector, where it provides components for electric vehicles and advanced driver-assistance systems (ADAS), and the industrial sector, where its products are used in smart grid applications and industrial automation. Additionally, ON Semiconductor benefits from strategic partnerships and collaborations that enhance its product offerings and market reach. With a focus on innovation and energy efficiency, the company leverages its extensive portfolio and expertise to meet the growing demand for semiconductor solutions in the digital and connected world.
ON Semiconductor Financial Statement Overview
Summary
ON Semiconductor shows strong profitability and a stable balance sheet, but faces challenges with declining revenue and free cash flow. High profit margins and effective cash flow generation underline operational efficiency, yet monitoring future revenue trends and cash flow dynamics is crucial.Income Statement
ON Semiconductor has demonstrated strong financial performance with robust profitability. The company achieved a Gross Profit Margin of 45.4% and a Net Profit Margin of 22.2% in 2024, indicating efficient cost management and profitability. However, the Revenue Growth Rate in 2024 was negative at -14.2%, reflecting a decline in sales compared to the previous year, which could be a concern if the trend continues. Despite this, the EBIT Margin of 24.9% and EBITDA Margin of 24.9% illustrate solid operational performance in the industry.85
Very Positive
Balance Sheet
ON Semiconductor's balance sheet reflects a stable financial position with a Debt-to-Equity Ratio of 0.38, indicating a moderate level of leverage. The Return on Equity (ROE) for 2024 was impressive at 17.9%, showing effective utilization of equity to generate profits. The Equity Ratio stands at 62.4%, suggesting a strong equity base underpinning the company's assets. While the company maintains a healthy balance sheet, the decrease in equity from 2023 to 2024 should be monitored.78
Positive
Cash Flow
The company generated strong Free Cash Flow in 2024, with an Operating Cash Flow to Net Income Ratio of 1.21, reflecting high-quality earnings. However, the Free Cash Flow Growth Rate was -52.6%, primarily due to the significant decrease in Free Cash Flow from 2023 to 2024. The Free Cash Flow to Net Income Ratio remained healthy at 1.21, demonstrating consistent cash flow generation relative to net income.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 7.08B | 8.25B | 8.33B | 6.74B | 5.25B | Gross Profit |
| 3.22B | 3.88B | 4.08B | 2.71B | 1.72B | EBIT |
| 1.77B | 2.54B | 2.36B | 1.29B | 348.70M | EBITDA |
| 1.77B | 3.22B | 3.34B | 1.98B | 1.04B | Net Income Common Stockholders |
| 1.57B | 2.18B | 1.90B | 1.01B | 234.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.99B | 2.48B | 2.92B | 1.35B | 1.08B | Total Assets |
| 14.09B | 13.22B | 11.98B | 9.63B | 8.66B | Total Debt |
| 3.37B | 3.36B | 3.23B | 3.07B | 3.49B | Net Debt |
| 675.60M | 876.80M | 311.70M | 1.72B | 2.41B | Total Liabilities |
| 5.28B | 5.41B | 5.77B | 5.02B | 5.11B | Stockholders Equity |
| 8.80B | 7.78B | 6.19B | 4.59B | 3.54B |
| Cash Flow | Free Cash Flow | |||
| 1.91B | 401.90M | 1.60B | 1.29B | 400.70M | Operating Cash Flow |
| 1.91B | 1.98B | 2.63B | 1.78B | 884.30M | Investing Cash Flow |
| -1.01B | -1.74B | -705.40M | -915.10M | -453.60M | Financing Cash Flow |
| -683.80M | -686.50M | -370.00M | -569.40M | -244.00M |
ON Semiconductor Technical Analysis
Negative
44.49
Price Trends
55.57
Negative
62.44
Negative
67.45
Negative
Market Momentum
-2.36
Positive
29.33
Positive
4.81
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ON, the sentiment is Negative. The current price of 44.49 is below the 20-day moving average (MA) of 50.50, below the 50-day MA of 55.57, and below the 200-day MA of 67.45, indicating a bearish trend. The MACD of -2.36 indicates Positive momentum. The RSI at 29.33 is Positive, neither overbought nor oversold. The STOCH value of 4.81 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ON.
ON Semiconductor Risk Analysis
ON Semiconductor disclosed 37 risk factors in its most recent earnings report. ON Semiconductor reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ON Semiconductor Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $112.18B | 72.13 | 4.46% | 1.61% | -19.28% | -44.00% | |
70 Outperform | $177.37B | 37.50 | 28.39% | 2.74% | -10.72% | -26.60% | |
68 Neutral | $31.27B | 102.52 | 5.12% | 3.13% | -44.31% | -86.74% | |
67 Neutral | $18.75B | 12.25 | 17.88% | ― | -14.19% | -27.42% | |
67 Neutral | $878.27B | 151.86 | 8.71% | 1.16% | 43.99% | -62.55% | |
61 Neutral | $53.55B | 21.47 | 27.33% | 1.87% | -4.99% | -9.18% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
ON
ON Semiconductor
44.49
-33.13
-42.68%
ADI
Analog Devices
226.18
37.61
19.94%
AVGO
Broadcom
187.48
54.28
40.75%
MCHP
Microchip
58.14
-27.54
-32.14%
NXPI
NXP Semiconductors
211.16
-35.90
-14.53%
TXN
Texas Instruments
194.84
27.65
16.54%
ON Semiconductor Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: -13.19% | Next Earnings Date: May 5, 2025
Earnings Call Sentiment Neutral
ON Semiconductor faced a challenging Q4 2024 and anticipates a difficult Q1 2025, with significant revenue declines and market volatility impacting automotive and industrial segments. Despite these challenges, the company achieved record free cash flow, continued to invest in strategic acquisitions and innovations, and maintained strong shareholder returns. However, the negative trends in revenue and market conditions suggest cautious optimism for future recovery.Highlights
Record-Free Cash Flow
Generated $1.2 billion of free cash flow in 2024, representing a 3x increase year over year, achieving a free cash flow margin of 25% in Q4.
Silicon Carbide Revenue Growth
Fourth-quarter revenue increased sequentially, resulting in a 22% increase for the second half over the first half of 2024, driven by design wins and ramping demand.
Acquisition of Corbus Silicon Carbide JFET Business
Closed the acquisition to enhance the silicon carbide portfolio, targeting a $1.3 billion TAM with 30% revenue CAGR through 2030.
Introduction of Treo Platform
Launched the Treo platform built on 65-nanometer technology, unlocking a $36 billion TAM opportunity with up to 70% gross margins.
Shareholder Returns
Returned 54% of free cash flow to shareholders in 2024, exceeding the 50% target, including $200 million of share repurchases in Q4.
Lowlights
Significant Revenue Decline
Q1 2025 revenue guidance down to $1.35-$1.45 billion, a significant drop from Q4 2024 due to weakened demand across all regions.
Automotive Segment Volatility
Forecasted Q1 2025 automotive revenue to decline by more than 25% sequentially, driven by a temporary decrease in China due to early Chinese New Year and inventory digestion.
Industrial Market Weakness
Industrial revenue decreased 5% sequentially in Q4 2024, with ongoing inventory digestion and weak PMI across major regions.
Non-Core Market Segment Decline
Q4 revenue for non-core markets declined, driven by volatility and pricing pressures, resulting in a strategic decision to exit these markets over time.
Underutilization and Margin Pressure
Q1 2025 non-GAAP gross margin guidance between 39% and 41%, pressured by underutilization and unfavorable product mix.
Company Guidance
In the fourth quarter of 2024, ON Semiconductor Corporation reported a non-GAAP gross margin of 45.3% on a revenue of $1.72 billion, with non-GAAP earnings per share at $0.95. Full-year revenue reached $7.1 billion with a non-GAAP gross margin of 45.5%. Despite facing a challenging market environment, the company saw an 8% sequential increase in automotive revenue, notably driven by a 18% quarter-over-quarter growth in China. The industrial segment saw a 5% sequential decline, while smaller sectors like AI data centers and aerospace and defense experienced revenue growth over 40% and 50%, respectively. For Q1 2025, ON Semiconductor anticipates revenue between $1.35 billion and $1.45 billion, with non-GAAP gross margin projected between 39% and 41%. The company aims to maintain operational efficiency and profitability through strategic cost management, including Fabrite strategy implementation and ongoing R&D investments, despite geopolitical uncertainties and inventory digestion challenges across core markets.ON Semiconductor Corporate Events
M&A TransactionsBusiness Operations and Strategy
ON Semiconductor Expands with Silicon Carbide Acquisition
Positive
Dec 10, 2024
onsemi is set to acquire the Silicon Carbide JFET technology business from Qorvo for $115 million, enhancing its power solutions for AI data centers and emerging markets like EV battery disconnects. This acquisition, expected to close in early 2025, aims to boost onsemi’s market opportunity by $1.3 billion within five years by leveraging SiC JFETs for their energy efficiency and cost-effectiveness. This move aligns with onsemi’s strategy to improve energy efficiency and power density, crucial for modern AI workloads.
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.