In today's fast-paced and competitive business landscape, it is essential for investors and industry enthusiasts to thoroughly analyze companies before making investment decisions. In this article, we will conduct a comprehensive industry comparison, evaluating ON Semiconductor ON against its key competitors in the Semiconductors & Semiconductor Equipment industry. By examining key financial metrics, market position, and growth prospects, we aim 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 | 14.69 | 3.81 | 3.92 | 5.7% | $0.71 | $0.85 | -4.95% |
| NVIDIA Corp | 77.17 | 66.01 | 41.23 | 32.31% | $17.75 | $20.41 | 262.12% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.13 | 7.93 | 12.84 | 6.38% | $428.26 | $314.51 | 16.52% |
| Broadcom Inc | 74.75 | 11.54 | 18.30 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 231.35 | 4.59 | 11.43 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 28.71 | 9.82 | 6.67 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 30.20 | 10.40 | 10.57 | 6.52% | $1.77 | $2.1 | -16.4% |
| ARM Holdings PLC | 544.45 | 31.25 | 51.01 | 4.35% | $0.06 | $0.89 | 46.6% |
| Intel Corp | 31.39 | 1.22 | 2.33 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 54.02 | 3.25 | 11.05 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 26.25 | 7.37 | 6.56 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 96.13 | 18.57 | 21.55 | 4.45% | $0.1 | $0.25 | 1.51% |
| STMicroelectronics NV | 10.89 | 2.25 | 2.43 | 3.04% | $1.06 | $1.44 | -18.41% |
| First Solar Inc | 28.68 | 4.24 | 8.25 | 3.48% | $0.36 | $0.35 | 44.83% |
| GLOBALFOUNDRIES Inc | 30.90 | 2.44 | 3.90 | 1.19% | $0.54 | $0.39 | -15.86% |
| ASE Technology Holding Co Ltd | 22.69 | 2.70 | 1.36 | 1.94% | $23.55 | $20.87 | 1.46% |
| United Microelectronics Corp | 12.88 | 1.87 | 3.12 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 19.66 | 2.63 | 3.70 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 43.78 | 6.43 | 15.70 | 3.86% | $0.07 | $0.13 | 26.67% |
| Lattice Semiconductor Corp | 38.60 | 12.13 | 12.11 | 2.15% | $0.03 | $0.1 | -23.6% |
| MACOM Technology Solutions Holdings Inc | 117.12 | 7.19 | 11.81 | 1.45% | $0.04 | $0.1 | 6.98% |
| Cirrus Logic Inc | 25.01 | 3.61 | 3.84 | 2.48% | $0.05 | $0.19 | -39.93% |
| Average | 75.13 | 10.35 | 12.37 | 4.53% | $24.33 | $19.14 | 12.6% |
Through a detailed examination of ON Semiconductor, we can deduce the following trends:
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At 14.69, the stock's Price to Earnings ratio is 0.2x less than the industry average, suggesting favorable growth potential.
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Considering a Price to Book ratio of 3.81, which is well below the industry average by 0.37x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio is 3.92, which is 0.32x 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 5.7%, which is 1.17% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $710 Million, which is 0.03x below the industry average. This potentially indicates lower profitability or financial challenges.
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The gross profit of $850 Million is 0.04x below that of its industry, suggesting potential lower revenue after accounting for production costs.
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With a revenue growth of -4.95%, which is much lower than the industry average of 12.6%, 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 examining ON Semiconductor in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
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ON Semiconductor demonstrates a stronger financial position compared to its top 4 peers in the sector.
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With a lower debt-to-equity ratio of 0.41, the company relies less on debt financing and maintains a healthier 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. The high ROE suggests strong profitability relative to equity, while low EBITDA and gross profit may indicate room for improvement in operational efficiency. Additionally, the low revenue growth implies a slower expansion rate compared to industry competitors.
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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