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 | 17 | 3.83 | 4.21 | 4.11% | $0.58 | $0.78 | -17.15% |
| NVIDIA Corp | 58.89 | 52.98 | 32.48 | 32.31% | $17.75 | $20.41 | 262.12% |
| Taiwan Semiconductor Manufacturing Co Ltd | 29.84 | 7.37 | 11.46 | 6.67% | $474.12 | $358.12 | 40.07% |
| Broadcom Inc | 68.15 | 10.52 | 16.68 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 174.24 | 4.19 | 10.30 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 21.98 | 7.76 | 5.19 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 36 | 11.02 | 11.84 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 309.75 | 23.19 | 37.56 | 4.07% | $0.23 | $0.91 | 39.11% |
| Analog Devices Inc | 68.42 | 3.21 | 11.69 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 81.71 | 0.73 | 1.51 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 110.63 | 20.63 | 23.98 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 31.63 | 6.65 | 6.58 | 1.98% | $0.41 | $0.74 | -45.76% |
| STMicroelectronics NV | 8.16 | 1.57 | 1.90 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 31.06 | 2.22 | 3.66 | 1.38% | $0.56 | $0.4 | -11.54% |
| First Solar Inc | 20.41 | 3.37 | 6.53 | 4.94% | $0.48 | $0.5 | 24.65% |
| United Microelectronics Corp | 12.98 | 1.93 | 3.03 | 3.76% | $27.9 | $19.98 | 0.89% |
| ASE Technology Holding Co Ltd | 19.37 | 2.21 | 1.15 | 2.62% | $26.08 | $23.07 | 2.91% |
| Skyworks Solutions Inc | 22.05 | 2.69 | 3.94 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 40.30 | 5.84 | 14.36 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 106.55 | 7.04 | 11.32 | 1.88% | $0.04 | $0.1 | 28.25% |
| Cirrus Logic Inc | 26.30 | 4.09 | 4.28 | 2.3% | $0.07 | $0.19 | 17.98% |
| Lattice Semiconductor Corp | 34.06 | 9.13 | 10.26 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 62.5 | 8.97 | 10.94 | 4.63% | $26.79 | $21.44 | 15.62% |
By analyzing ON Semiconductor, we can infer the following trends:
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The Price to Earnings ratio of 17.0 is 0.27x lower than the industry average, indicating potential undervaluation for the stock.
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The current Price to Book ratio of 3.83, which is 0.43x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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With a relatively low Price to Sales ratio of 4.21, which is 0.38x the industry average, the stock might be considered undervalued based on sales performance.
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With a Return on Equity (ROE) of 4.11% that is 0.52% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $580 Million, which is 0.02x below the industry average, the company may face lower profitability or financial challenges.
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The gross profit of $780 Million is 0.04x below that of its industry, suggesting potential lower revenue after accounting for production costs.
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The company is witnessing a substantial decline in revenue growth, with a rate of -17.15% compared to the industry average of 15.62%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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.
By evaluating ON Semiconductor against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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ON Semiconductor is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.4.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For ON Semiconductor, the PE, PB, and PS ratios are all low compared to industry peers, indicating potential undervaluation. However, the low ROE suggests lower profitability compared to peers. The low EBITDA and gross profit also point to weaker financial performance. Additionally, the low revenue growth indicates slower expansion compared to industry counterparts.
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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