On Semiconductor Corp (NASDAQ: ON)

Sector: Technology Industry: Semiconductors CIK: 0001097864
Market Cap 24.91 Bn
P/B 3.15
P/E 78.06
P/S 4.03
ROIC (Qtr) 2.42
Div Yield % 0.00
Rev 1y % (Qtr) -11.98
Total Debt (Qtr) 3.38 Bn
Debt/Equity (Qtr) 0.43

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 1.78B provides robust 0.53x coverage of total debt 3.38B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.47B provide 4945x coverage of short-term debt 500000, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.78B provides strong 12.34x coverage of stock compensation 144.60M, indicating sustainable incentive practices.
  • Operating cash flow of 1.78B provides exceptional 25.91x coverage of interest expenses 68.90M, showing strong debt service capability.
  • Strong tangible asset base of 11.08B provides 3.28x coverage of total debt 3.38B, indicating robust asset backing and low credit risk.

Bear case

  • Operating cash flow of 1.78B barely covers its investment activities of (639.50M), with a coverage ratio of -2.79, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (639.50M) provide weak support for R&D spending of 605M, which is -1.06x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 2.47B provide limited coverage of acquisition spending of (117.50M), which is -21.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 423.10M show weak coverage of depreciation charges of 637.70M, with a 0.66 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 1.37B represents just -855x of debt issuance (1.60M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2024)

Subsegments Breakdown of Revenue (2024)

Peer comparison

Companies in the Semiconductors
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NVDA Nvidia Corp 4,521.08 Bn 45.58 24.16 10.48 Bn
2 TSM Taiwan Semiconductor Manufacturing Co Ltd 1,648.98 Bn 31.97 13.84 31.18 Bn
3 AVGO Broadcom Inc. 1,565.97 Bn 67.71 24.51 65.14 Bn
4 MU Micron Technology Inc 366.37 Bn 30.76 8.66 12.43 Bn
5 AMD Advanced Micro Devices Inc 333.34 Bn 100.83 10.41 3.87 Bn
6 INTC Intel Corp 271.33 Bn 1,370.33 5.08 46.55 Bn
7 QCOM Qualcomm Inc/De 199.55 Bn 36.01 4.51 14.81 Bn
8 TXN Texas Instruments Inc 172.17 Bn 34.14 9.97 14.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.98 4.13
EV to Cash from Ops. EV/CFO 14.43 -370.81
EV to Debt EV to Debt 7.63 88.27
EV to EBIT EV/EBIT 60.88 -65.23
EV to EBITDA EV/EBITDA 27.69 22.97
EV to Free Cash Flow [EV/FCF] EV/FCF 18.83 -8.14
EV to Market Cap EV to Market Cap 1.03 0.80
EV to Revenue EV/Rev 4.16 20.31
Price to Book Value [P/B] P/B 3.15 5.16
Price to Earnings [P/E] P/E 78.06 9.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 2.39
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 8.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.63
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 9.91
Interest Coverage Int. cover (Qtr) 6.14 8.38
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 54.74 -155.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 0.09 45.60
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 5.64
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -78.95 26.23
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -64.32 47.12
EBIT Growth (1y) % EBIT 1y % (Qtr) -79.52 25.83
EBT Growth (1y) % EBT 1y % (Qtr) -82.32 39.93
EPS Growth (1y) % EPS 1y % (Qtr) -80.98 24.64
FCF Growth (1y) % FCF 1y % (Qtr) 34.57 244.42
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -34.53 43.10
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.48 0.49
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.09
Cash Ratio Cash Ratio (Qtr) 2.04 2.23
Current Ratio Curr Ratio (Qtr) 5.23 5.43
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 0.34
Interest Cover Ratio Int Coverage (Qtr) 6.14 8.38
Times Interest Earned Times Interest Earned (Qtr) 6.14 8.38
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 17.10 -112.38
EBIT Margin % EBIT Margin % (Qtr) 6.84 -91.98
EBT Margin % EBT Margin % (Qtr) 5.72 -132.25
Gross Margin % Gross Margin % (Qtr) 35.70 47.73
Net Profit Margin % Net Margin % (Qtr) 5.20 -133.26