Overall ONTO gets a fundamental rating of 7 out of 10. We evaluated ONTO against 113 industry peers in the Semiconductors & Semiconductor Equipment industry. ONTO scores excellent points on both the profitability and health parts. This is a solid base for a good stock. ONTO is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! This makes ONTO very considerable for growth and quality investing!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

ONTO had positive earnings in the past year.
ONTO had a positive operating cash flow in the past year.
Each year in the past 5 years ONTO has been profitable.
Each year in the past 5 years ONTO had a positive operating cash flow.

1.2 Ratios

The Return On Assets of ONTO (8.01%) is better than 76.11% of its industry peers.
ONTO has a better Return On Equity (8.74%) than 70.80% of its industry peers.
The Return On Invested Capital of ONTO (9.62%) is better than 78.76% of its industry peers.
The Average Return On Invested Capital over the past 3 years for ONTO is in line with the industry average of 10.75%.

		Industry Rank	Sector Rank
ROA	8.01%
ROE	8.74%
ROIC	9.62%

ROA(3y)9.44%

ROA(5y)7.81%

ROE(3y)10.48%

ROE(5y)8.77%

ROIC(3y)9.69%

ROIC(5y)8.09%

1.3 Margins

ONTO has a Profit Margin of 17.46%. This is in the better half of the industry: ONTO outperforms 78.76% of its industry peers.
ONTO's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 21.25%, ONTO belongs to the top of the industry, outperforming 80.53% of the companies in the same industry.
In the last couple of years the Operating Margin of ONTO has remained more or less at the same level.
Looking at the Gross Margin, with a value of 54.83%, ONTO is in the better half of the industry, outperforming 73.45% of the companies in the same industry.
In the last couple of years the Gross Margin of ONTO has grown nicely.

		Industry Rank	Sector Rank
OM	21.25%
PM (TTM)	17.46%
GM	54.83%

OM growth 3Y0.92%

OM growth 5YN/A

PM growth 3Y4.23%

PM growth 5Y101.1%

GM growth 3Y-0.48%

GM growth 5Y3.97%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), ONTO is destroying value.
ONTO has more shares outstanding than it did 1 year ago.
The number of shares outstanding for ONTO has been reduced compared to 5 years ago.
ONTO has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

2.2 Solvency

An Altman-Z score of 36.20 indicates that ONTO is not in any danger for bankruptcy at the moment.
ONTO has a better Altman-Z score (36.20) than 93.81% of its industry peers.
There is no outstanding debt for ONTO. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0
Altman-Z	36.2

ROIC/WACC0.89

WACC10.84%

2.3 Liquidity

A Current Ratio of 9.49 indicates that ONTO has no problem at all paying its short term obligations.
ONTO has a better Current ratio (9.49) than 92.92% of its industry peers.
ONTO has a Quick Ratio of 7.89. This indicates that ONTO is financially healthy and has no problem in meeting its short term obligations.
ONTO has a better Quick ratio (7.89) than 92.92% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	9.49
Quick Ratio	7.89

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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 has been growing slightly by 5.92% over the past year.
ONTO shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 36.96% yearly.
ONTO shows a small growth in Revenue. In the last year, the Revenue has grown by 6.38%.
The Revenue has been growing by 26.41% on average over the past years. This is a very strong growth!

EPS 1Y (TTM)5.92%

EPS 3Y11.5%

EPS 5Y36.96%

EPS Q2Q%-31.34%

Revenue 1Y (TTM)6.38%

Revenue growth 3Y7.77%

Revenue growth 5Y26.41%

Sales Q2Q%-13.49%

3.2 Future

The Earnings Per Share is expected to grow by 16.13% on average over the next years. This is quite good.
ONTO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.56% yearly.

EPS Next Y-5.49%

EPS Next 2Y7.64%

EPS Next 3Y12.75%

EPS Next 5Y16.13%

Revenue Next Year1.99%

Revenue Next 2Y9.37%

Revenue Next 3Y11.56%

Revenue Next 5Y13.56%

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 estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 40.81, which means the current valuation is very expensive for ONTO.
72.57% of the companies in the same industry are more expensive than ONTO, based on the Price/Earnings ratio.
ONTO's Price/Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 27.32.
The Price/Forward Earnings ratio is 34.17, which means the current valuation is very expensive for ONTO.
Based on the Price/Forward Earnings ratio, ONTO is valued a bit cheaper than the industry average as 63.72% of the companies are valued more expensively.
ONTO's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 24.32.

		Industry Rank	Sector Rank
PE	40.81
Fwd PE	34.17

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, ONTO is valued a bit cheaper than the industry average as 64.60% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, ONTO is valued a bit cheaper than 78.76% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	40.24
EV/EBITDA	34.44

4.3 Compensation for Growth

ONTO has a very decent profitability rating, which may justify a higher PE ratio.
ONTO's earnings are expected to grow with 12.75% in the coming years. This may justify a more expensive valuation.