Assessing ON Semiconductor's Performance Against Competitors In Semiconductors & Semiconductor Equipment Industry

In the fast-paced and highly competitive business world of today, conducting thorough company analysis is essential for investors and industry observers. In this article, we will conduct an extensive industry comparison, evaluating ON Semiconductor ON in relation to its major competitors in the Semiconductors & Semiconductor Equipment industry. Through a detailed examination of key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and illuminate 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.

By closely examining ON Semiconductor, we can identify the following trends:

• At 17.93, the stock's Price to Earnings ratio is 0.24x less than the industry average, suggesting favorable growth potential.

• The current Price to Book ratio of 3.58, which is 0.36x the industry average, is substantially lower than the industry average, indicating potential undervaluation.

• With a relatively low Price to Sales ratio of 4.26, which is 0.35x the industry average, the stock might be considered undervalued based on sales performance.

• The Return on Equity (ROE) of 4.75% is 0.02% above the industry average, highlighting efficient use of equity to generate profits.

• With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $630 Million, which is 0.02x below the industry average, the company may face lower profitability or financial challenges.

• With lower gross profit of $800 Million, which indicates 0.03x below the industry average, the company may experience lower revenue after accounting for production costs.

• The company's revenue growth of -19.21% is significantly lower compared to the industry average of 15.03%. This indicates a potential fall in the company's sales performance.

Debt To Equity Ratio

The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.

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 comparing ON Semiconductor with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:

• Among its top 4 peers, ON Semiconductor has a stronger financial position with a lower debt-to-equity ratio of 0.39.

• 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. Conversely, the high ROE suggests strong profitability relative to the sector average. The low EBITDA and gross profit figures may raise concerns about operational efficiency and revenue generation. Additionally, the low revenue growth rate implies a slower expansion compared to industry competitors.

This article was generated by Benzinga's automated content engine and reviewed by an editor.