Industry Comparison: Evaluating ON Semiconductor Against Competitors In Semiconductors & Semiconductor Equipment Industry
In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating ON Semiconductor (NASDAQ:ON) against its key competitors in the Semiconductors & Semiconductor Equipment industry. By analyzing important 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.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| ON Semiconductor Corp | 15.40 | 4 | 4.11 | 5.7% | $0.71 | $0.85 | -4.95% |
| NVIDIA Corp | 69.04 | 59.06 | 36.88 | 32.31% | $17.75 | $20.41 | 262.12% |
| Taiwan Semiconductor Manufacturing Co Ltd | 33.24 | 7.96 | 12.89 | 6.38% | $428.26 | $314.51 | 16.52% |
| Broadcom Inc | 67.20 | 10.38 | 16.45 | 3.02% | $5.58 | $7.78 | 42.99% |
| Advanced Micro Devices Inc | 231.04 | 4.59 | 11.41 | 0.22% | $0.9 | $2.56 | 2.24% |
| Qualcomm Inc | 25.55 | 8.74 | 5.93 | 9.79% | $3.08 | $5.28 | 1.23% |
| Texas Instruments Inc | 31.81 | 10.95 | 11.14 | 6.52% | $1.77 | $2.1 | -16.4% |
| ARM Holdings PLC | 557.59 | 32 | 52.24 | 4.35% | $0.06 | $0.89 | 46.6% |
| Intel Corp | 35.52 | 1.38 | 2.64 | -0.36% | $2.09 | $5.22 | 8.61% |
| Analog Devices Inc | 55.04 | 3.32 | 11.26 | 0.85% | $0.93 | $1.18 | -33.83% |
| Microchip Technology Inc | 26.29 | 7.37 | 6.57 | 2.25% | $0.47 | $0.79 | -40.62% |
| Monolithic Power Systems Inc | 97.42 | 18.82 | 21.84 | 4.45% | $0.1 | $0.25 | 1.51% |
| STMicroelectronics NV | 10.54 | 2.17 | 2.35 | 3.04% | $1.06 | $1.44 | -18.41% |
| GLOBALFOUNDRIES Inc | 36.11 | 2.85 | 4.56 | 1.19% | $0.54 | $0.39 | -15.86% |
| ASE Technology Holding Co Ltd | 23.06 | 2.75 | 1.38 | 1.94% | $23.55 | $20.87 | 1.46% |
| First Solar Inc | 21.82 | 3.23 | 6.27 | 3.48% | $0.36 | $0.35 | 44.83% |
| United Microelectronics Corp | 11.83 | 1.71 | 2.87 | 2.9% | $24.0 | $16.9 | 0.78% |
| Skyworks Solutions Inc | 21.94 | 2.94 | 4.13 | 2.91% | $0.31 | $0.42 | -9.29% |
| Universal Display Corp | 48.95 | 7.19 | 17.55 | 3.86% | $0.07 | $0.13 | 26.67% |
| Lattice Semiconductor Corp | 38.43 | 12.08 | 12.05 | 2.15% | $0.03 | $0.1 | -23.6% |
| MACOM Technology Solutions Holdings Inc | 120.93 | 7.42 | 12.19 | 1.45% | $0.04 | $0.1 | 6.98% |
| Cirrus Logic Inc | 28.31 | 4.08 | 4.34 | 2.48% | $0.07 | $0.19 | -0.27% |
| Average | 75.79 | 10.05 | 12.24 | 4.53% | $24.33 | $19.14 | 14.49% |
By conducting a comprehensive analysis of ON Semiconductor, the following trends become evident:
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A Price to Earnings ratio of 15.4 significantly below the industry average by 0.2x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 4.0, significantly falling below the industry average by 0.4x, it suggests undervaluation and the possibility of untapped growth prospects.
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With a relatively low Price to Sales ratio of 4.11, which is 0.34x the industry average, the stock might be considered undervalued based on sales performance.
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With a Return on Equity (ROE) of 5.7% that is 1.17% above the industry average, it appears that the company exhibits efficient use of equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $710 Million is 0.03x below the industry average, suggesting potential lower profitability or financial challenges.
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The gross profit of $850 Million is 0.04x below that of its industry, suggesting potential lower revenue after accounting for production costs.
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The company's revenue growth of -4.95% is significantly below the industry average of 14.49%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio helps evaluate the capital structure and financial leverage 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.
By considering the Debt-to-Equity ratio, ON Semiconductor can be compared to its top 4 peers, leading to the following observations:
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Compared to its top 4 peers, ON Semiconductor has a stronger financial position indicated by its lower debt-to-equity ratio of 0.41.
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This suggests that the company relies less on debt financing and has a more favorable balance between debt and equity, which can be seen as a positive attribute by investors.
Key Takeaways
For ON Semiconductor, the PE, PB, and PS ratios are all low compared to industry peers, indicating potential undervaluation. The high ROE suggests efficient use of shareholder funds. However, the low EBITDA, gross profit, and revenue growth may raise concerns about the company's operational performance within the industry.
This article was generated by Benzinga's automated content engine and reviewed by an editor.