In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating ON Semiconductor ON vis-à-vis its key competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in the industry.
ON Semiconductor Background
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.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| ON Semiconductor Corp | 15.74 | 4.23 | 4.17 | 7.37% | $0.79 | $0.94 | -4.06% |
| NVIDIA Corp | 92.48 | 52.05 | 38.90 | 30.42% | $10.96 | $13.4 | 205.51% |
| Broadcom Inc | 38.12 | 24.53 | 14.99 | 15.3% | $5.3 | $6.41 | 4.09% |
| Advanced Micro Devices Inc | 322.53 | 4.94 | 12.25 | 1.2% | $1.22 | $2.91 | 10.16% |
| Intel Corp | 106.95 | 1.71 | 3.32 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 20.81 | 7.06 | 4.52 | 12.4% | $3.58 | $5.62 | 4.99% |
| Texas Instruments Inc | 22.46 | 8.54 | 8.30 | 8.14% | $1.98 | $2.43 | -12.7% |
| Analog Devices Inc | 29.31 | 2.68 | 7.89 | 1.39% | $1.18 | $1.65 | -16.36% |
| ARM Holdings PLC | 438.63 | 16.54 | 27.82 | -2.45% | $-0.12 | $0.76 | 27.94% |
| Microchip Technology Inc | 19.46 | 6.36 | 5.37 | 9.66% | $0.75 | $1.12 | 8.74% |
| STMicroelectronics NV | 9.87 | 2.37 | 2.41 | 6.69% | $1.43 | $1.95 | -3.36% |
| GLOBALFOUNDRIES Inc | 20.69 | 2.69 | 3.82 | 2.34% | $0.64 | $0.53 | -10.7% |
| ASE Technology Holding Co Ltd | 20.25 | 2.10 | 1.09 | 3.06% | $28.07 | $24.92 | -18.27% |
| United Microelectronics Corp | 8.90 | 1.77 | 2.62 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 18.39 | 2.67 | 3.58 | 3.76% | $0.37 | $0.51 | -9.61% |
| First Solar Inc | 32.91 | 2.47 | 4.93 | 4.35% | $0.37 | $0.38 | 27.37% |
| Lattice Semiconductor Corp | 42.05 | 14.09 | 12.05 | 8.96% | $0.07 | $0.13 | 11.4% |
| Universal Display Corp | 40.82 | 6.03 | 14.26 | 3.77% | $0.06 | $0.11 | -12.13% |
| MACOM Technology Solutions Holdings Inc | 77.71 | 5.69 | 9.27 | 2.63% | $0.03 | $0.09 | -15.59% |
| Rambus Inc | 17.81 | 5.55 | 12.89 | 5.87% | $0.06 | $0.1 | 16.08% |
| Allegro Microsystems Inc | 26.18 | 5.08 | 5.40 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 70.32 | 8.75 | 9.78 | 6.39% | $4.53 | $4.53 | 10.27% |
By carefully studying ON Semiconductor, we can deduce the following trends:
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A Price to Earnings ratio of 15.74 significantly below the industry average by 0.22x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 4.23, significantly falling below the industry average by 0.48x, it suggests undervaluation and the possibility of untapped growth prospects.
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The Price to Sales ratio is 4.17, which is 0.43x the industry average. This suggests a possible undervaluation based on sales performance.
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The company has a higher Return on Equity (ROE) of 7.37%, which is 0.98% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $790 Million, which is 0.17x below the industry average, the company may face lower profitability or financial challenges.
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With lower gross profit of $940 Million, which indicates 0.21x below the industry average, the company may experience lower revenue after accounting for production costs.
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With a revenue growth of -4.06%, which is much lower than the industry average of 10.27%, the company is experiencing a notable slowdown in sales expansion.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When comparing ON Semiconductor with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
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ON Semiconductor has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.43.
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This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
Key Takeaways
The valuation analysis for ON Semiconductor in the Semiconductors & Semiconductor Equipment industry indicates that the company has low PE, PB, and PS ratios compared to its peers. This suggests that the company may be undervalued in terms of its earnings, book value, and sales. Additionally, ON Semiconductor has a high ROE, indicating efficient use of shareholder equity. However, the company has low EBITDA, gross profit, and revenue growth, which may indicate potential challenges in generating profits and expanding its business.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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