ON Semiconductor Corp: Poised for Growth and Outperformance

With its robust financial position and strong growth potential, ON Semiconductor Corp (ON) has become a key focus for investors and financial analysts. The company, currently trading at $81.52, has seen a slight daily loss of 0.1%, but its three-month change stands at an impressive 3.55%. A closer look at the company’s performance, as measured by the GF Score, reveals a bright outlook for future growth.

What is the GF Score?

The GF Score is a stock performance ranking system developed by GuruFocus. It relies on five key valuation factors that have been proven to correlate strongly with long-term stock performance. Backtested from 2006 to 2021, the GF Score has shown that stocks with higher scores tend to generate better returns. Investors are advised to consider companies with high GF Scores when making investment decisions. Scores range from 0 to 100, with 100 being the highest rank.

ON Semiconductor Corp has been awarded an impressive GF Score of 94 out of 100. This indicates a high potential for outperformance, with particular strengths in growth and profitability.

Understanding ON Semiconductor Corp’s Business

ON Semiconductor Corp is a leading supplier of power semiconductors and sensors, catering primarily to the automotive and industrial markets. The company boasts a market capitalization of $34.84 billion and annual sales of $8.25 billion. As the second-largest power chipmaker globally and the top supplier of image sensors to the automotive industry, ON Semiconductor Corp has strategically positioned itself to capitalize on emerging trends.

The company’s hybrid manufacturing strategy ensures flexible capacity, enabling it to adapt to changing market demands. ON Semiconductor Corp is actively focusing on high-growth areas such as electric vehicles, autonomous vehicles, industrial automation, and renewable energy. By embracing these innovative sectors, ON Semiconductor Corp has solidified its position at the forefront of technological advancements.

Financial Strength Breakdown

ON Semiconductor Corp’s Financial Strength rating underscores its solid financial foundation and effective capital management. The company’s impressive Interest Coverage ratio of 34.94 indicates a strong ability to meet interest obligations. Moreover, its Altman Z-Score, a measure of financial distress probability, stands at a robust 6.17. This suggests a low likelihood of financial difficulties.

Strategic debt management is evident in ON Semiconductor Corp’s Debt-to-Revenue ratio of 0.41, reaffirming its financial health and stability.

Profitability Rank Breakdown

ON Semiconductor Corp’s high Profitability Rank highlights its exceptional ability to generate profits. The company’s Operating Margin has consistently improved over the past five years, reaching an impressive 31.67%. Similarly, its Gross Margin has seen a steady increase, reaching 47.06% in 2023. These figures underscore the company’s efficiency in converting revenue into profit.

With a Predictability Rank of 4.0 out of five, ON Semiconductor Corp demonstrates reliable operational performance.

Growth Rank Breakdown

ON Semiconductor Corp’s high Growth Rank reflects its commitment to business expansion. The company’s 3-Year Revenue Growth Rate of 13.8% outperforms 58.31% of its peers in the Semiconductors industry. Additionally, ON Semiconductor Corp has experienced significant growth in EBITDA, with a three-year growth rate of 46 and a five-year rate of 24.6. These figures demonstrate the company’s sustained growth momentum.

Conclusion: ON Semiconductor Corp’s Position for Outperformance

Based on its financial strength, profitability, and growth metrics, ON Semiconductor Corp is well-positioned for future outperformance. The company’s strategic focus on high-growth sectors, coupled with its strong financial foundation, makes it an attractive investment option for those seeking growth and stability.

For investors interested in similar opportunities, exploring companies with strong GF Scores using the GF Score Screen is recommended.

This article, generated by GuruFocus, provides general insights and is not tailored financial advice. The analysis is based on historical data and analyst projections, using an impartial methodology. It does not serve as specific investment guidance or a recommendation to buy or sell any stock. Individual investment objectives and financial circumstances should be considered. The aim is to provide long-term, fundamental data-driven analysis. Please note that the analysis may not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus does not hold any position in the stocks mentioned in this article.

FAQs

1. What is a GF Score?

The GF Score is a ranking system developed by GuruFocus that evaluates a company’s stock performance based on five valuation factors. It has been proven to correlate with long-term stock returns, with higher scores indicating higher potential for outperformance.

2. What is ON Semiconductor Corp’s GF Score?

ON Semiconductor Corp has been assigned a GF Score of 94 out of 100, reflecting its strong growth and profitability potential.

3. What sectors is ON Semiconductor Corp focusing on?

ON Semiconductor Corp is focusing on high-growth sectors such as electric vehicles, autonomous vehicles, industrial automation, and renewable energy. These areas offer significant growth opportunities and position the company at the forefront of technological innovation.

4. How strong is ON Semiconductor Corp’s financial position?

ON Semiconductor Corp has a solid financial foundation, as evidenced by its impressive interest coverage ratio, low probability of financial distress, and strategic debt management.

5. How does ON Semiconductor Corp rank in terms of profitability?

ON Semiconductor Corp has an exceptional ability to generate profits, with consistently improving operating and gross margins. Its predictability rank of 4.0 out of five further indicates reliable operational performance.

6. Is ON Semiconductor Corp poised for growth?

Yes, ON Semiconductor Corp’s high growth rank and strong growth rates in revenue and EBITDA indicate its sustained growth momentum and potential for future expansion.

7. Is this article tailored financial advice?

No, this article provides general insights and analysis based on historical data and an impartial methodology. It does not serve as specific investment guidance and should not be considered as tailored financial advice.