In the fast-paced and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating ON Semiconductor ON in comparison to its major competitors within the Semiconductors & Semiconductor Equipment industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 15.88 | 4.26 | 4.20 | 7.37% | $0.79 | $0.94 | -4.06% |
| NVIDIA Corp | 74.38 | 51.62 | 36.33 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 40.93 | 26.08 | 16.09 | 15.3% | $5.3 | $6.41 | 4.09% |
| Advanced Micro Devices Inc | 397.47 | 6.09 | 15.09 | 1.2% | $1.22 | $2.91 | 10.16% |
| Intel Corp | 111.30 | 1.78 | 3.46 | 2.57% | $5.57 | $7.05 | 9.71% |
| Qualcomm Inc | 23.96 | 8.13 | 5.21 | 12.4% | $3.58 | $5.62 | 4.99% |
| Texas Instruments Inc | 24.31 | 9.25 | 8.99 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1656.89 | 28.14 | 47.94 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 34.24 | 2.67 | 8.33 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 20.52 | 6.70 | 5.66 | 5.97% | $0.75 | $1.12 | -18.6% |
| STMicroelectronics NV | 10.51 | 2.52 | 2.56 | 6.69% | $1.5 | $1.95 | -3.21% |
| Monolithic Power Systems Inc | 83.53 | 17.14 | 19.60 | 4.85% | $0.12 | $0.25 | -1.3% |
| GLOBALFOUNDRIES Inc | 28.73 | 2.62 | 3.95 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 23.33 | 2.42 | 1.25 | 3.17% | $28.28 | $25.76 | 4.16% |
| United Microelectronics Corp | 8.97 | 1.79 | 2.64 | 4.72% | $29.0 | $20.46 | -24.3% |
| First Solar Inc | 20.47 | 2.53 | 5.13 | 5.38% | $0.47 | $0.5 | 15.58% |
| Skyworks Solutions Inc | 18.53 | 2.69 | 3.61 | 3.76% | $0.37 | $0.51 | -9.61% |
| Lattice Semiconductor Corp | 43.69 | 16.06 | 15.33 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 39.87 | 5.53 | 13.97 | 4.36% | $0.08 | $0.12 | -6.34% |
| Rambus Inc | 21.17 | 6.62 | 15.32 | 5.87% | $0.07 | $0.1 | -0.12% |
| MACOM Technology Solutions Holdings Inc | 90.62 | 6.63 | 10.81 | 1.27% | $0.03 | $0.09 | -12.75% |
| Allegro Microsystems Inc | 26.81 | 5.20 | 5.53 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 133.34 | 10.11 | 11.75 | 6.74% | $4.52 | $4.53 | 10.27% |
By conducting an in-depth analysis of ON Semiconductor, we can identify the following trends:
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The stock's Price to Earnings ratio of 15.88 is lower than the industry average by 0.12x, suggesting potential value in the eyes of market participants.
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The current Price to Book ratio of 4.26, which is 0.42x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 4.2, which is 0.36x the industry average.
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The Return on Equity (ROE) of 7.37% is 0.63% above the industry average, highlighting efficient use of equity to generate profits.
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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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Compared to its industry, the company has lower gross profit of $940 Million, which indicates 0.21x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of -4.06% is significantly lower compared to the industry average of 10.27%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a measure that indicates the level of debt a company has taken on relative to the value of its assets net of liabilities.
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 assessing ON Semiconductor against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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When comparing the debt-to-equity ratio, ON Semiconductor is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.43.
Key Takeaways
For ON Semiconductor, the PE, PB, and PS ratios are all low compared to industry peers, indicating potential undervaluation. Conversely, the high ROE suggests efficient use of shareholder funds. The low EBITDA and gross profit may raise concerns about operational performance, while the low revenue growth indicates a stagnant top-line compared to industry counterparts in the Semiconductors & Semiconductor Equipment sector.
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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