We assign a fundamental rating of 6 out of 10 to ON. ON was compared to 113 industry peers in the Semiconductors & Semiconductor Equipment industry. ON gets an excellent profitability rating and is at the same time showing great financial health properties. ON is not valued too expensively and it also shows a decent growth rate.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

ON had positive earnings in the past year.
In the past year ON had a positive cash flow from operations.
In the past 5 years ON has always been profitable.
Each year in the past 5 years ON had a positive operating cash flow.

1.2 Ratios

ON's Return On Assets of 2.45% is in line compared to the rest of the industry. ON outperforms 55.75% of its industry peers.
ON's Return On Equity of 4.04% is in line compared to the rest of the industry. ON outperforms 56.64% of its industry peers.
ON has a Return On Invested Capital of 6.79%. This is in the better half of the industry: ON outperforms 73.45% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ON is significantly above the industry average of 10.75%.
The last Return On Invested Capital (6.79%) for ON is well below the 3 year average (19.04%), which needs to be investigated, but indicates that ON had better years and this may not be a problem.

		Industry Rank	Sector Rank
ROA	2.45%
ROE	4.04%
ROIC	6.79%

ROA(3y)14.52%

ROA(5y)11.35%

ROE(3y)25.56%

ROE(5y)21.06%

ROIC(3y)19.04%

ROIC(5y)15.34%

1.3 Margins

Looking at the Profit Margin, with a value of 5.16%, ON is in line with its industry, outperforming 57.52% of the companies in the same industry.
ON's Profit Margin has improved in the last couple of years.
ON's Operating Margin of 15.06% is fine compared to the rest of the industry. ON outperforms 74.34% of its industry peers.
In the last couple of years the Operating Margin of ON has grown nicely.
With a Gross Margin value of 35.75%, ON is not doing good in the industry: 61.95% of the companies in the same industry are doing better.
ON's Gross Margin has improved in the last couple of years.

		Industry Rank	Sector Rank
OM	15.06%
PM (TTM)	5.16%
GM	35.75%

OM growth 3Y9.94%

OM growth 5Y18.56%

PM growth 3Y14.02%

PM growth 5Y42.07%

GM growth 3Y4.08%

GM growth 5Y4.89%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so ON is creating value.
The number of shares outstanding for ON has been reduced compared to 1 year ago.
Compared to 5 years ago, ON has more shares outstanding
Compared to 1 year ago, ON has an improved debt to assets ratio.

2.2 Solvency

ON has an Altman-Z score of 5.03. This indicates that ON is financially healthy and has little risk of bankruptcy at the moment.
ON has a Altman-Z score (5.03) which is in line with its industry peers.
ON has a debt to FCF ratio of 2.47. This is a good value and a sign of high solvency as ON would need 2.47 years to pay back of all of its debts.
The Debt to FCF ratio of ON (2.47) is better than 66.37% of its industry peers.
ON has a Debt/Equity ratio of 0.43. This is a healthy value indicating a solid balance between debt and equity.
ON has a Debt to Equity ratio of 0.43. This is in the lower half of the industry: ON underperforms 67.26% of its industry peers.
Even though the debt/equity ratio score it not favorable for ON, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.43
Debt/FCF	2.47
Altman-Z	5.03

ROIC/WACC0.65

WACC10.4%

2.3 Liquidity

A Current Ratio of 5.23 indicates that ON has no problem at all paying its short term obligations.
With a decent Current ratio value of 5.23, ON is doing good in the industry, outperforming 74.34% of the companies in the same industry.
A Quick Ratio of 3.54 indicates that ON has no problem at all paying its short term obligations.
With a decent Quick ratio value of 3.54, ON is doing good in the industry, outperforming 68.14% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	5.23
Quick Ratio	3.54

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

ON shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -37.85%.
The Earnings Per Share has been growing by 21.88% on average over the past years. This is a very strong growth
The Revenue for ON has decreased by -16.13% in the past year. This is quite bad
The Revenue has been growing slightly by 5.12% on average over the past years.

EPS 1Y (TTM)-37.85%

EPS 3Y10.62%

EPS 5Y21.88%

EPS Q2Q%-36.36%

Revenue 1Y (TTM)-16.13%

Revenue growth 3Y1.67%

Revenue growth 5Y5.12%

Sales Q2Q%-11.98%

3.2 Future

Based on estimates for the next years, ON will show a quite strong growth in Earnings Per Share. The EPS will grow by 11.23% on average per year.
ON is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.96% yearly.

EPS Next Y-39.69%

EPS Next 2Y-13.17%

EPS Next 3Y2.09%

EPS Next 5Y11.23%

Revenue Next Year-15.68%

Revenue Next 2Y-5.76%

Revenue Next 3Y-0.83%

Revenue Next 5Y3.96%

3.3 Evolution

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

ON is valuated rather expensively with a Price/Earnings ratio of 23.30.
88.50% of the companies in the same industry are more expensive than ON, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 27.21, ON is valued at the same level.
Based on the Price/Forward Earnings ratio of 20.66, the valuation of ON can be described as rather expensive.
85.84% of the companies in the same industry are more expensive than ON, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 24.26. ON is around the same levels.

		Industry Rank	Sector Rank
PE	23.3
Fwd PE	20.66

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, ON is valued cheaper than 82.30% of the companies in the same industry.
ON's Price/Free Cash Flow ratio is rather cheap when compared to the industry. ON is cheaper than 92.04% of the companies in the same industry.