In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating ON Semiconductor ON against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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 | 15.87 | 3.58 | 3.93 | 4.11% | $0.58 | $0.78 | -17.15% |
| NVIDIA Corp | 57.90 | 52.10 | 31.93 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 32.31 | 7.98 | 12.41 | 6.67% | $474.12 | $358.12 | 40.07% |
| Broadcom Inc | 141.78 | 12.49 | 17.38 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 192.88 | 4.64 | 11.40 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 21.52 | 7.60 | 5.09 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 35.54 | 10.88 | 11.69 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 361.93 | 27.10 | 43.88 | 4.07% | $0.23 | $0.91 | 39.11% |
| Analog Devices Inc | 68.27 | 3.20 | 11.66 | 1.11% | $1.04 | $1.31 | -24.84% |
| Micron Technology Inc | 136.81 | 2.35 | 4.26 | 0.75% | $2.82 | $1.83 | 81.53% |
| Intel Corp | 98.08 | 0.87 | 1.82 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 108.90 | 20.31 | 23.61 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 30.32 | 6.37 | 6.31 | 1.98% | $0.41 | $0.74 | -45.76% |
| First Solar Inc | 21.58 | 3.57 | 6.90 | 4.94% | $0.48 | $0.5 | 24.65% |
| STMicroelectronics NV | 7.39 | 1.42 | 1.72 | 3.51% | $1.31 | $1.15 | -25.29% |
| ASE Technology Holding Co Ltd | 20.40 | 2.33 | 1.21 | 2.62% | $26.08 | $23.07 | 2.91% |
| United Microelectronics Corp | 13.17 | 1.96 | 3.08 | 3.76% | $27.9 | $19.98 | 0.89% |
| GLOBALFOUNDRIES Inc | 26.90 | 1.93 | 3.17 | 1.38% | $0.56 | $0.4 | -11.54% |
| Skyworks Solutions Inc | 20.08 | 2.45 | 3.59 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 44.49 | 6.44 | 15.85 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 107.21 | 7.09 | 11.39 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 38.01 | 10.19 | 11.45 | 3.28% | $0.04 | $0.08 | -34.72% |
| Cirrus Logic Inc | 22.27 | 3.46 | 3.62 | 2.3% | $0.07 | $0.19 | 17.98% |
| Average | 73.08 | 8.94 | 11.06 | 4.12% | $25.83 | $20.68 | 12.46% |
By carefully studying ON Semiconductor, we can deduce the following trends:
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At 15.87, the stock's Price to Earnings ratio is 0.22x less than the industry average, suggesting favorable growth potential.
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The current Price to Book ratio of 3.58, which is 0.4x 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 3.93, which is 0.36x the industry average.
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With a Return on Equity (ROE) of 4.11% that is 0.01% 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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Compared to its industry, the company has lower gross profit of $780 Million, which indicates 0.04x below the industry average, potentially indicating 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 12.46%, which indicates a challenging sales environment.
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.
By analyzing ON Semiconductor in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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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, EBITDA, gross profit, and revenue growth suggest weaker financial performance relative to competitors in the Semiconductors & Semiconductor Equipment sector. This may indicate operational inefficiencies or challenges in generating profits and revenue growth.
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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