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 | 16.08 | 3.63 | 3.98 | 4.11% | $0.58 | $0.78 | -17.15% |
| NVIDIA Corp | 54.81 | 49.31 | 30.23 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 30.30 | 7.48 | 11.64 | 6.67% | $474.12 | $358.12 | 40.07% |
| Broadcom Inc | 127.84 | 11.26 | 15.67 | -2.77% | $6.39 | $8.36 | 4.68% |
| Advanced Micro Devices Inc | 178.40 | 4.29 | 10.55 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 21.31 | 7.52 | 5.04 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 35.10 | 10.74 | 11.54 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 347.05 | 25.98 | 42.08 | 4.07% | $0.23 | $0.91 | 39.11% |
| Analog Devices Inc | 67.81 | 3.18 | 11.58 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 81.83 | 0.73 | 1.52 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 106.57 | 19.87 | 23.10 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 30.86 | 6.49 | 6.42 | 1.98% | $0.41 | $0.74 | -45.76% |
| First Solar Inc | 21.41 | 3.54 | 6.85 | 4.94% | $0.48 | $0.5 | 24.65% |
| STMicroelectronics NV | 7.46 | 1.43 | 1.73 | 3.51% | $1.31 | $1.15 | -25.29% |
| GLOBALFOUNDRIES Inc | 28.13 | 2.01 | 3.32 | 1.38% | $0.56 | $0.4 | -11.54% |
| United Microelectronics Corp | 13.33 | 1.98 | 3.11 | 3.76% | $27.9 | $19.98 | 0.89% |
| ASE Technology Holding Co Ltd | 19.23 | 2.20 | 1.14 | 2.62% | $26.08 | $23.07 | 2.91% |
| Skyworks Solutions Inc | 21.05 | 2.57 | 3.76 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 43.46 | 6.29 | 15.48 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 102.40 | 6.77 | 10.88 | 1.88% | $0.04 | $0.1 | 28.25% |
| Cirrus Logic Inc | 25.40 | 3.95 | 4.13 | 2.3% | $0.07 | $0.19 | 17.98% |
| Lattice Semiconductor Corp | 32.95 | 8.83 | 9.93 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 66.51 | 8.88 | 10.94 | 4.28% | $26.93 | $21.58 | 7.14% |
When closely examining ON Semiconductor, the following trends emerge:
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With a Price to Earnings ratio of 16.08, which is 0.24x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
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With a Price to Book ratio of 3.63, significantly falling below the industry average by 0.41x, it suggests undervaluation and the possibility of untapped growth prospects.
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With a relatively low Price to Sales ratio of 3.98, which is 0.36x 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 0.17% 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 company has lower gross profit of $780 Million, which indicates 0.04x below the industry average. This potentially indicates 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 7.14%, which indicates a challenging sales environment.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.
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 can be assessed by comparing it to its top 4 peers, resulting in the following observations:
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Among its top 4 peers, ON Semiconductor has a stronger financial position with a lower debt-to-equity ratio of 0.4.
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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. However, the low ROE, EBITDA, gross profit, and revenue growth suggest weaker financial performance relative to competitors in the Semiconductors & Semiconductor Equipment sector. It may be prudent to further investigate the company's operational efficiency and growth strategies to improve its standing within the industry.
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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