In the dynamic 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 and its primary competitors in the Semiconductors & Semiconductor Equipment industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide 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.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| ON Semiconductor Corp | 15.45 | 4.15 | 4.09 | 7.37% | $0.79 | $0.94 | -4.06% |
| NVIDIA Corp | 75.74 | 52.56 | 36.99 | 32.23% | $14.56 | $16.79 | 265.28% |
| Broadcom Inc | 47.43 | 8.42 | 14.33 | 2.81% | $4.61 | $7.38 | 34.17% |
| Advanced Micro Devices Inc | 339.13 | 5.20 | 12.88 | 1.2% | $1.22 | $2.91 | 10.16% |
| Qualcomm Inc | 23.92 | 8.12 | 5.20 | 12.4% | $3.58 | $5.62 | 4.99% |
| Intel Corp | 105.47 | 1.69 | 3.28 | 2.57% | $5.57 | $7.05 | 9.71% |
| Texas Instruments Inc | 24.04 | 9.15 | 8.89 | 8.14% | $1.98 | $2.43 | -12.7% |
| ARM Holdings PLC | 1588.80 | 26.99 | 45.97 | 1.78% | $0.18 | $0.79 | 13.81% |
| Analog Devices Inc | 34.70 | 2.71 | 8.45 | 1.3% | $1.12 | $1.47 | -22.68% |
| Microchip Technology Inc | 20.65 | 6.74 | 5.69 | 5.97% | $0.75 | $1.12 | -18.6% |
| STMicroelectronics NV | 9.94 | 2.39 | 2.42 | 6.69% | $1.5 | $1.95 | -3.21% |
| Monolithic Power Systems Inc | 76.14 | 15.83 | 17.86 | 4.85% | $0.12 | $0.25 | -1.3% |
| GLOBALFOUNDRIES Inc | 28.66 | 2.61 | 3.95 | 2.53% | $0.73 | $0.53 | 0.11% |
| ASE Technology Holding Co Ltd | 24.68 | 2.57 | 1.32 | 3.17% | $28.28 | $25.76 | 4.16% |
| United Microelectronics Corp | 9.55 | 1.91 | 2.81 | 4.72% | $29.0 | $20.46 | -24.3% |
| Skyworks Solutions Inc | 18.72 | 2.72 | 3.65 | 3.76% | $0.37 | $0.51 | -9.61% |
| First Solar Inc | 19.51 | 2.41 | 4.89 | 5.38% | $0.47 | $0.5 | 15.58% |
| Lattice Semiconductor Corp | 41.92 | 15.42 | 14.71 | 14.98% | $0.05 | $0.12 | -3.05% |
| Universal Display Corp | 38.12 | 5.29 | 13.35 | 4.36% | $0.08 | $0.12 | -6.34% |
| MACOM Technology Solutions Holdings Inc | 90.62 | 6.63 | 10.81 | 1.27% | $0.03 | $0.09 | -12.75% |
| Rambus Inc | 20.11 | 6.33 | 14.56 | 5.87% | $0.07 | $0.1 | -0.12% |
| Allegro Microsystems Inc | 24.37 | 4.73 | 5.03 | 2.99% | $0.06 | $0.13 | 2.49% |
| Average | 126.77 | 9.07 | 11.29 | 6.14% | $4.49 | $4.58 | 11.7% |
After examining ON Semiconductor, the following trends can be inferred:
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A Price to Earnings ratio of 15.45 significantly below the industry average by 0.12x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The current Price to Book ratio of 4.15, which is 0.46x 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 4.09, which is 0.36x the industry average.
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With a Return on Equity (ROE) of 7.37% that is 1.23% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $790 Million, which is 0.18x below the industry average. This potentially indicates lower profitability or financial challenges.
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The company has lower gross profit of $940 Million, which indicates 0.21x below the industry average. This potentially indicates 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 11.7%. This indicates a potential fall in the company's sales performance.
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.
In terms of the Debt-to-Equity ratio, ON Semiconductor stands in comparison with its top 4 peers, leading to the following comparisons:
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Among its top 4 peers, ON Semiconductor has a stronger financial position with a lower debt-to-equity ratio of 0.43.
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This indicates that the company relies less on debt financing and maintains a more favorable balance between debt and equity, which can be viewed positively by investors.
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 indicate operational challenges, while the low revenue growth suggests a stagnant market position.
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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