Analyzing ON Semiconductor In Comparison To Competitors In Semiconductors & Semiconductor Equipment Industry

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.

Through an analysis of ON Semiconductor, we can infer the following trends:

• With a Price to Earnings ratio of 16.17, which is 0.21x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.

• The current Price to Book ratio of 3.65, which is 0.39x the industry average, is substantially lower than the industry average, indicating potential undervaluation.

• The Price to Sales ratio is 4.01, which is 0.35x the industry average. This suggests a possible undervaluation based on sales performance.

• The company has a lower Return on Equity (ROE) of 4.11%, which is 0.07% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

• Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $580 Million, which is 0.02x below the industry average, potentially indicating lower profitability or financial challenges.

• 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.

• The company's revenue growth of -17.15% is significantly below the industry average of 12.99%. This suggests a potential struggle in generating increased sales volume.

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.

When evaluating ON Semiconductor alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:

• Among its top 4 peers, ON Semiconductor has a stronger financial position with a lower debt-to-equity ratio of 0.4.

• 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.