Attractive PE Ratio
Low EV/EBITDA Ratio
Strong Net Profit Margin
High Return on Equity
Strong Liquidity Ratios
Low Debt Levels
🏆 Strong Gross Margins
🚀 Focused Transformation Strategy
🔋 Silicon Carbide Leadership
🌟 Strategic R&D Investments
📊 Expected Revenue Recovery
Price to Sales Ratio Concerns
📉 Declining Core Market Demand
🔍 Limited Visibility
⚠️ Q1 Revenue Guidance
Overall, ON Semiconductor demonstrates a strong business model with solid margins and strategic focus on high-growth segments, although it faces challenges from declining demand in non-core markets and limited visibility for future recovery. Their focus on innovation and market leadership in silicon carbide and AI data centers provides a promising outlook for the future.
Analysis Date: February 10, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$141.74
Current Market Price: $33.24
IV/P Ratio: 4.26x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
77.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for ON
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (9.15)
P/B ratio ≤ 1.5 (1.64)
Current ratio ≥ 2.0 (5.06x)
Long-term debt < Net current assets (0.62x)
Margin of safety (77.0%)
ON does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A net profit margin of 22.21% indicates that the company retains a significant portion of revenue as profit, reflecting strong cost management and pricing power.
The return on equity (ROE) of 18.59% demonstrates effective use of shareholder equity to generate profits.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
18.59%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.70%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
45.06%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
22.21%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 5.06 and quick ratio of 3.38 indicate robust liquidity, suggesting the company can easily cover its short-term obligations.
With a debt-to-equity ratio of 0.38, the company is minimally leveraged, which reduces financial risk.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.38x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
5.06x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
ON Semiconductor has maintained a robust non-GAAP gross margin of 45.5% against revenue of $7.1 billion for the full year, showcasing operational efficiency and strong pricing power in a challenging market environment.
The company is committed to its transformation journey by focusing on intelligent power and sensing technologies, investing in high-growth segments such as automotive and AI data centers. This strategic focus positions ON Semiconductor well for long-term growth.
The company is gaining market share in silicon carbide technologies, which are critical for EVs and AI applications. This positions them favorably within the high-growth segments of the semiconductor market.
There has been a significant decline in non-core markets, which has impacted revenue. The company is prioritizing exiting these volatile markets, which could limit short-term revenue opportunities.
Continuing investment in R&D, particularly with the new Treo platform, is expected to unlock significant market opportunities, projecting a TAM of $36 billion with high gross margins.
Despite current demand uncertainty, management believes they are under-shipping natural demand and expects a recovery in automotive and industrial segments as inventory levels normalize.
The company acknowledges limited visibility for Q1 and beyond due to geopolitical uncertainties and fluctuating demand, making it challenging to predict recovery timelines.
The company expects a significant drop in Q1 revenue forecasted between $1.35 billion and $1.45 billion, indicating continued challenges in the short term.