Overall ON gets a fundamental rating of 6 out of 10. We evaluated ON against 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 has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year ON was profitable.
ON had a positive operating cash flow in the past year.
Each year in the past 5 years ON has been profitable.
ON had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

With a Return On Assets value of 2.45%, ON perfoms like the industry average, outperforming 55.75% of the companies in the same industry.
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 10.78%.
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

ON has a Profit Margin (5.16%) which is in line with its industry peers.
In the last couple of years the Profit Margin of ON has grown nicely.
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.
ON's Gross Margin of 35.75% is on the low side compared to the rest of the industry. ON is outperformed by 61.95% of its industry peers.
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

ON has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
ON has less shares outstanding than it did 1 year ago.
ON has more shares outstanding than it did 5 years ago.
ON has a better debt/assets ratio than last year.

2.2 Solvency

ON has an Altman-Z score of 5.12. This indicates that ON is financially healthy and has little risk of bankruptcy at the moment.
ON has a Altman-Z score of 5.12. This is comparable to the rest of the industry: ON outperforms 56.64% of 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.
Looking at the Debt to FCF ratio, with a value of 2.47, ON is in the better half of the industry, outperforming 66.37% of the companies in the same industry.
ON has a Debt/Equity ratio of 0.43. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of ON (0.43) is worse than 67.26% of its industry peers.
Although ON does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

		Industry Rank	Sector Rank
Debt/Equity	0.43
Debt/FCF	2.47
Altman-Z	5.12

ROIC/WACC0.65

WACC10.52%

2.3 Liquidity

A Current Ratio of 5.23 indicates that ON has no problem at all paying its short term obligations.
ON has a better Current ratio (5.23) than 74.34% of its industry peers.
ON has a Quick Ratio of 3.54. This indicates that ON is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 3.54, ON is in the better half of 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

The earnings per share for ON have decreased strongly by -37.85% in the last year.
ON shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 21.88% yearly.
Looking at the last year, ON shows a very negative growth in Revenue. The Revenue has decreased by -16.13% in the last year.
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

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

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-5.74%

Revenue Next 3Y-0.81%

Revenue Next 5Y3.96%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in 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

Based on the Price/Earnings ratio of 23.38, the valuation of ON can be described as rather expensive.
ON's Price/Earnings ratio is rather cheap when compared to the industry. ON is cheaper than 87.61% of the companies in the same industry.
ON is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
ON is valuated rather expensively with a Price/Forward Earnings ratio of 20.73.
Based on the Price/Forward Earnings ratio, ON is valued cheaply inside the industry as 84.96% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 25.83. ON is around the same levels.

		Industry Rank	Sector Rank
PE	23.38
Fwd PE	20.73

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, ON is valued cheaply inside the industry as 81.42% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, ON is valued cheaper than 92.04% of the companies in the same industry.