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 | 15.48 | 3.49 | 3.84 | 4.11% | $0.58 | $0.78 | -17.15% |
| NVIDIA Corp | 65.43 | 58.86 | 36.08 | 30.94% | $19.71 | $22.57 | 122.4% |
| Taiwan Semiconductor Manufacturing Co Ltd | 35.69 | 8.37 | 13.70 | 8.36% | $360.77 | $439.35 | 38.95% |
| Broadcom Inc | 140.15 | 12.34 | 17.18 | -2.77% | $6.39 | $8.36 | 47.27% |
| Advanced Micro Devices Inc | 182.04 | 4.38 | 10.76 | 0.47% | $1.12 | $2.86 | 8.88% |
| Qualcomm Inc | 21.30 | 7.52 | 5.04 | 8.67% | $2.87 | $5.22 | 11.15% |
| Texas Instruments Inc | 34.96 | 10.66 | 11.50 | 6.59% | $1.76 | $2.21 | -15.65% |
| ARM Holdings PLC | 351.99 | 26.35 | 42.68 | 4.07% | $0.23 | $0.91 | 39.11% |
| Micron Technology Inc | 150.07 | 2.58 | 4.68 | 1.99% | $3.63 | $2.74 | 93.27% |
| Analog Devices Inc | 68.33 | 3.20 | 11.67 | 1.11% | $1.04 | $1.31 | -24.84% |
| Intel Corp | 91.58 | 0.82 | 1.70 | -1.46% | $0.86 | $4.55 | -0.9% |
| Monolithic Power Systems Inc | 105.20 | 19.62 | 22.81 | 4.66% | $0.13 | $0.28 | 15.03% |
| Microchip Technology Inc | 29.99 | 6.30 | 6.24 | 1.98% | $0.41 | $0.74 | -45.76% |
| STMicroelectronics NV | 7.34 | 1.41 | 1.71 | 3.51% | $1.31 | $1.15 | -25.29% |
| ASE Technology Holding Co Ltd | 20.36 | 2.33 | 1.21 | 2.62% | $26.08 | $23.07 | 2.91% |
| GLOBALFOUNDRIES Inc | 26.28 | 1.88 | 3.10 | 1.38% | $0.56 | $0.4 | -11.54% |
| First Solar Inc | 17.18 | 2.84 | 5.49 | 4.94% | $0.48 | $0.5 | 24.65% |
| United Microelectronics Corp | 11.71 | 1.74 | 2.74 | 3.76% | $27.9 | $19.98 | 0.89% |
| Skyworks Solutions Inc | 19.62 | 2.39 | 3.50 | 1.9% | $0.25 | $0.36 | -15.47% |
| Universal Display Corp | 43.10 | 6.24 | 15.35 | 3.47% | $0.07 | $0.12 | 8.15% |
| MACOM Technology Solutions Holdings Inc | 116.74 | 7.72 | 12.40 | 1.88% | $0.04 | $0.1 | 28.25% |
| Lattice Semiconductor Corp | 39.02 | 10.46 | 11.76 | 3.28% | $0.04 | $0.08 | -34.72% |
| Average | 75.15 | 9.43 | 11.49 | 4.35% | $21.7 | $25.56 | 12.7% |
When conducting a detailed analysis of ON Semiconductor, the following trends become clear:
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The stock's Price to Earnings ratio of 15.48 is lower than the industry average by 0.21x, suggesting potential value in the eyes of market participants.
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Considering a Price to Book ratio of 3.49, 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 3.84, which is 0.33x the industry average. This suggests a possible undervaluation based on sales performance.
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The company has a lower Return on Equity (ROE) of 4.11%, which is 0.24% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $580 Million, which is 0.03x below the industry average, potentially indicating lower profitability or financial challenges.
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With lower gross profit of $780 Million, which indicates 0.03x below the industry average, the company may experience lower revenue after accounting for production costs.
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The company's revenue growth of -17.15% is significantly lower compared to the industry average of 12.7%. This indicates a potential fall in the company's sales performance.
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.
In light of the Debt-to-Equity ratio, a comparison between ON Semiconductor and its top 4 peers reveals the following information:
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When comparing the debt-to-equity ratio, ON Semiconductor is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 0.4.
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 is important to consider both valuation metrics and financial health indicators when evaluating ON Semiconductor's position 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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