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ON Semiconductor (ON)
NASDAQ:ON
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ON Semiconductor
(NASDAQ:ON)
Rating:65Neutral
Price Target:
$46.00
â–¼(-9.84%Downside)
Positive Factors
Automotive Market
ON expects the core Auto market to bottom with both major segments rebounding.
Share Repurchases
The company is allocating 100% of free cash flow to share repurchases, indicating confidence in long-term value.
SiC Market Share
ON believes its market share in SiC has expanded due to its strong solution value proposition.
Negative Factors
Competition in Image Sensors
Intense competition in image sensors and a negative stance on SiC limit the company's growth prospects.
Gross Margin Improvement
Gross margin improvement is not expected until the first half of 2026, which affects the company's potential for stock re-rating above 15x.
Growth Drivers
The absence of near-term growth drivers may lead the company to explore inorganic growth opportunities, indicating potential challenges in its existing portfolio.
ON Semiconductor (ON) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$21.32B
Dividend YieldN/A
Average Volume (3M)10.78M
Price to Earnings (P/E)35.4
Beta (1Y)1.56
Revenue Growth-18.28%
EPS Growth-70.98%
CountryUS
Employees26,400
SectorTechnology
Sector Strength78
IndustrySemiconductors
Share Statistics
EPS (TTM)0.55
Shares Outstanding417,885,350
10 Day Avg. Volume13,297,081
30 Day Avg. Volume10,781,079
Financial Highlights & Ratios
PEG Ratio0.17
Price to Book (P/B)4.37
Price to Sales (P/S)0.00
P/FCF Ratio16.92
Enterprise Value/Market Cap1.28
Enterprise Value/Revenue0.94
Enterprise Value/Gross Profit10.34
Enterprise Value/Ebitda2.87
Forecast
1Y Price Target
$47.15Price Target Upside-7.59% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering24
ON Semiconductor Business Overview & Revenue Model
Company DescriptionON Semiconductor (ON) is a leading provider of semiconductor solutions offering a comprehensive portfolio of energy-efficient power management, analog, sensors, logic, timing, connectivity, discrete, system-on-chip (SoC) and custom devices. The company operates across various sectors including automotive, industrial, and communications, catering to the growing demand for advanced technology in electrification, energy infrastructure, and sustainable energy solutions.
How the Company Makes MoneyON Semiconductor generates revenue through the design, manufacture, and sale of semiconductor components that are integral to a wide range of electronic devices and systems. The company's key revenue streams include the automotive sector, where it provides components for advanced driver-assistance systems (ADAS), electric vehicles, and other automotive applications. In the industrial sector, ON Semiconductor offers products for automation, energy infrastructure, and medical applications. Communications and computing are also significant contributors, with the company supplying components for wireless and wired connectivity solutions. Significant partnerships with original equipment manufacturers (OEMs) and other technology firms enhance its market reach and contribute to its earnings. Additionally, strategic acquisitions and investments in research and development support innovation and sustain the company's competitive advantage in the semiconductor industry.
ON Semiconductor Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: 21.74%|
Next Earnings Date:Aug 04, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant achievements in AI data center growth and free cash flow but also faced challenges like automotive revenue decline and gross margin pressures. The company's proactive measures in restructuring and focus on silicon carbide adoption in automotive signal positive long-term potential.Q1-2025 Updates
Positive Updates
Q1 2025 Revenue and Earnings Exceed Midpoint
Onsemi reported Q1 revenue of $1.45 billion and non-GAAP earnings per share of $0.55, both exceeding the midpoint of their guidance.
AI Data Center Revenue Growth
AI data center revenue more than doubled year-over-year in the first quarter, driven by the adoption of Onsemi's intelligent power solutions.
Strong Free Cash Flow and Share Buyback
Q1 free cash flow increased 72% year-over-year, and the company repurchased $300 million of shares, representing 66% of free cash flow.
Silicon Carbide Adoption in Automotive
Onsemi secured design wins with leading OEMs for silicon carbide technology in plug-in hybrid electric vehicles and battery electric vehicles, with expectations of silicon carbide adoption in nearly 50% of new models from recent launches in China.
Negative Updates
Automotive Revenue Decline
Automotive revenue declined 26% sequentially, driven by weakness in Europe and seasonality in Asia, particularly in China due to Chinese New Year.
Non-GAAP Gross Margin Decrease
Non-GAAP gross margin was 40%, down 530 basis points sequentially and 590 basis points year-over-year, impacted by lower revenue and under-absorption.
Restructuring and Workforce Reduction
The company reduced its global workforce by 9% and incurred restructuring charges, which increased GAAP operating expenses significantly.
Pricing Pressure and Low Single-Digit Declines
The company experienced low single-digit pricing declines in certain parts of its business, affecting revenue and margin expectations.
Company Guidance
During the first quarter of 2025, Onsemi exceeded the midpoint of its guidance with revenue of $1.45 billion and non-GAAP earnings per share of $0.55, alongside a non-GAAP gross margin of 40%. The company highlighted challenges such as a 26% sequential decline in automotive revenue and a 4% decrease in industrial revenue, although certain industrial segments, like medical and aerospace, showed improvement. Onsemi's strategic initiatives, including the "Fab Right" approach and investments in R&D, aim to streamline operations and drive gross margin expansion. The company also undertook structural changes like a 9% workforce reduction to improve long-term cost efficiency. Additionally, Onsemi plans to increase its share repurchase to 100% of free cash flow for 2025, with $1.5 billion remaining on its repurchase authorization. Looking ahead, the company anticipates Q2 revenue between $1.4 billion and $1.5 billion and projects a non-GAAP gross margin between 36.5% and 38.5%.ON Semiconductor Financial Statement Overview
Summary
ON Semiconductor shows strong cash flow and a solid balance sheet with low leverage, reflecting financial stability. However, the income statement reveals challenges with declining revenue and profitability margins. While the company remains fundamentally sound with a manageable debt level, improving revenue growth and profit margins is crucial for sustaining future growth.Income Statement
The Gross Profit Margin for TTM (Trailing-Twelve-Months) is 39.7%, indicating good profitability. However, the Net Profit Margin has decreased to 9.5% from 22.2% in the previous year, reflecting decreased efficiency at converting revenue into net income. The Revenue Growth Rate is negative at -5.9%, showing a decline in sales compared to the previous year. EBIT and EBITDA margins are also lower, suggesting reduced operational efficiency.65
Positive
Balance Sheet
The company's Debt-to-Equity Ratio is 0.42, demonstrating a strong capital structure with manageable debt levels. The Equity Ratio stands at 60.6%, indicating a solid equity base. Return on Equity (ROE) is 7.9% for TTM (Trailing-Twelve-Months), which is a decline from previous years, suggesting a decrease in profitability relative to equity.78
Positive
Cash Flow
The Free Cash Flow to Net Income Ratio is 2.44, indicating strong cash generation relative to net income. However, the Free Cash Flow Growth Rate is 27.8%, reflecting a slowdown compared to the previous annual growth. The Operating Cash Flow to Net Income Ratio is 3.17, demonstrating robust cash flow management, but the decline in operating cash flow from the previous year is a concern.70
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.67B | 7.08B | 8.25B | 8.33B | 6.74B | 5.25B | Gross Profit |
| 2.64B | 3.22B | 3.88B | 4.08B | 2.71B | 1.72B | EBIT |
| 742.20M | 1.77B | 2.54B | 2.36B | 1.29B | 348.70M | EBITDA |
| 1.30B | 1.77B | 3.22B | 3.34B | 1.98B | 1.04B | Net Income Common Stockholders |
| 633.70M | 1.57B | 2.18B | 1.90B | 1.01B | 234.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.01B | 2.99B | 2.48B | 2.92B | 1.35B | 1.08B | Total Assets |
| 13.25B | 14.09B | 13.22B | 11.98B | 9.63B | 8.66B | Total Debt |
| 3.37B | 3.37B | 3.36B | 3.23B | 3.07B | 3.49B | Net Debt |
| 607.80M | 675.60M | 876.80M | 311.70M | 1.72B | 2.41B | Total Liabilities |
| 5.21B | 5.28B | 5.41B | 5.77B | 5.02B | 5.11B | Stockholders Equity |
| 8.03B | 8.80B | 7.78B | 6.19B | 4.59B | 3.54B |
| Cash Flow | Free Cash Flow | ||||
| 1.55B | 1.21B | 401.90M | 1.60B | 1.29B | 400.70M | Operating Cash Flow |
| 2.01B | 1.91B | 1.98B | 2.63B | 1.78B | 884.30M | Investing Cash Flow |
| -989.40M | -1.01B | -1.74B | -705.40M | -915.10M | -453.60M | Financing Cash Flow |
| -870.60M | -683.80M | -686.50M | -370.00M | -569.40M | -244.00M |
ON Semiconductor Technical Analysis
Positive
51.02
Price Trends
41.64
Positive
44.88
Positive
56.56
Negative
Market Momentum
2.91
Negative
61.95
Neutral
80.32
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ON, the sentiment is Positive. The current price of 51.02 is above the 20-day moving average (MA) of 46.66, above the 50-day MA of 41.64, and below the 200-day MA of 56.56, indicating a neutral trend. The MACD of 2.91 indicates Negative momentum. The RSI at 61.95 is Neutral, neither overbought nor oversold. The STOCH value of 80.32 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ON.
ON Semiconductor Risk Analysis
ON Semiconductor disclosed 37 risk factors in its most recent earnings report. ON Semiconductor reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ON Semiconductor Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $20.18B | 14.73 | 11.65% | 5.71% | 2.22% | -22.39% | |
74 Outperform | $10.70B | 27.83 | 6.70% | 3.93% | -12.90% | -51.90% | |
73 Outperform | $60.04B | ― | -3.54% | 0.36% | 21.60% | 50.00% | |
71 Outperform | $26.78B | 24.87 | 6.33% | 1.23% | -25.35% | -70.00% | |
65 Neutral | $21.32B | 35.39 | 7.85% | ― | -18.28% | -70.98% | |
64 Neutral | $35.45B | 84.25 | >-0.01% | 2.77% | -42.35% | -100.12% | |
62 Neutral | $11.80B | 10.08 | -7.46% | 2.99% | 7.37% | -8.21% |
* Technology Sector Average
Performance Comparison
ON
ON Semiconductor
51.02
-19.71
-27.87%
MRVL
Marvell
67.19
-4.39
-6.13%
MCHP
Microchip
65.73
-22.82
-25.77%
SWKS
Skyworks Solutions
71.25
-31.39
-30.58%
STM
STMicroelectronics
29.18
-13.46
-31.57%
UMC
United Micro
8.12
-0.39
-4.58%
ON Semiconductor Corporate Events
Executive/Board ChangesShareholder Meetings
ON Semiconductor Holds Annual Stockholders Meeting
Neutral
May 21, 2025
On May 15, 2025, ON Semiconductor held its Annual Meeting of Stockholders where eight directors were elected for a one-year term. Additionally, stockholders approved the executive compensation and ratified PricewaterhouseCoopers LLP as the independent auditor for 2025.
The most recent analyst rating on (ON) stock is a Buy with a $90.00 price target. To see the full list of analyst forecasts on ON Semiconductor stock, see the ON Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.