Inquiry Into ON Semiconductor's Competitor Dynamics In Semiconductors & Semiconductor Equipment Industry

In the dynamic and fiercely competitive business environment, conducting a thorough analysis of companies is crucial for investors and industry enthusiasts. In this article, we will perform an extensive industry comparison, evaluating ON Semiconductor ON in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining crucial financial metrics, market position, and growth prospects, we aim to offer valuable insights for investors and shed light on company's performance within 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.

By thoroughly analyzing ON Semiconductor, we can discern the following trends:

• The stock's Price to Earnings ratio of 15.87 is lower than the industry average by 0.13x, suggesting potential value in the eyes of market participants.

• With a Price to Book ratio of 4.26, significantly falling below the industry average by 0.47x, it suggests undervaluation and the possibility of untapped growth prospects.

• With a relatively low Price to Sales ratio of 4.2, which is 0.39x the industry average, the stock might be considered undervalued based on sales performance.

• With a Return on Equity (ROE) of 7.37% that is 0.46% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.

• 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.

• The gross profit of $940 Million is 0.21x below that of its industry, suggesting potential lower revenue after accounting for production costs.

• The company is witnessing a substantial decline in revenue growth, with a rate of -4.06% compared to the industry average of 9.38%, which indicates a challenging sales environment.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.

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 evaluating ON Semiconductor alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

• In terms of the debt-to-equity ratio, ON Semiconductor has a lower level of debt compared to its top 4 peers, indicating a stronger financial position.

• This implies that the company relies less on debt financing and has a more favorable balance between debt and equity with a lower debt-to-equity ratio of 0.43.

Key Takeaways

The PE, PB, and PS ratios for ON Semiconductor are all low compared to its industry peers, indicating potential undervaluation. ON Semiconductor's high ROE suggests strong profitability relative to its peers. However, its low EBITDA, gross profit, and revenue growth may raise concerns about its operational performance and growth prospects within the industry.

This article was generated by Benzinga's automated content engine and reviewed by an editor.