Onto Innovation Inc (ONTO, Financial) has experienced a daily loss of 5.18%, but it has managed to achieve a 3-month gain of 14.6%. With an Earnings Per Share (EPS) of 3.51, questions arise about the stock's valuation. Is Onto Innovation (ONTO) significantly overvalued? This article aims to provide a detailed analysis to answer this question.
Company Introduction
Onto Innovation Inc is a leading company in the design, development, manufacture, and support of high-performance control metrology, defect inspection, lithography, and data analysis systems. These systems are primarily used by microelectronics device manufacturers. The company operates mainly in the United States, Asia, and Europe, with China and South Korea being its largest revenue sources.
As of October 16, 2023, Onto Innovation's share price stands at $130.95. However, the stock's fair value (GF Value) is estimated at $83.58. This discrepancy prompts a deeper exploration of the company's value, integrating financial assessment with essential company details.
Understanding the GF Value
The GF Value represents the current intrinsic value of a stock derived from our exclusive method. The GF Value Line on our summary page gives an overview of the fair value that the stock should be traded at. It is calculated based on three factors:
- Historical multiples (PE Ratio, PS Ratio, PB Ratio and Price-to-Free-Cash-Flow) that the stock has traded at.
- GuruFocus adjustment factor based on the company's past returns and growth.
- Future estimates of the business performance.
Onto Innovation (ONTO, Financial) seems to be significantly overvalued based on GuruFocus' valuation method. The GF Value estimates the stock's fair value based on historical multiples, an internal adjustment based on the company's past business growth, and analyst estimates of future business performance. If the stock's share price is significantly above the GF Value Line, the stock may be overvalued and have poor future returns. Conversely, if the stock's share price is significantly below the GF Value Line, the stock may be undervalued and have high future returns. With a current price of $130.95 per share and a market cap of $6.40 billion, Onto Innovation shows signs of being significantly overvalued.
Since Onto Innovation is significantly overvalued, the long-term return of its stock is likely to be much lower than its future business growth.
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[...]Conclusion
In summary, the stock of Onto Innovation (ONTO, Financial) shows every sign of being significantly overvalued. The company's financial condition is strong and its profitability is strong. Its growth ranks better than 97.68% of 775 companies in the Semiconductors industry. To learn more about Onto Innovation stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
