ON Semiconductor Corp (ON, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $76.06, ON Semiconductor Corp has witnessed a daily loss of 0.34%, marked against a three-month change of 15.23%. A thorough analysis, underlined by the GF Score, suggests that ON Semiconductor Corp is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, but a moderate GF Value rank, GuruFocus assigned ON Semiconductor Corp the GF Score of 94 out of 100, which signals the highest outperformance potential.
Understanding ON Semiconductor Corp Business
ON Semiconductor Corp, with a market cap of $32.50 billion and sales of $8.25 billion, is a leading supplier of power semiconductors and sensors, primarily serving the automotive and industrial markets. As the second-largest power chipmaker globally and the top supplier of image sensors to the automotive market, ON Semiconductor Corp has strategically shifted towards a hybrid manufacturing strategy to ensure flexible capacity. The company is keenly focused on emerging applications such as electric vehicles, autonomous vehicles, industrial automation, and renewable energy, positioning itself at the forefront of technological innovation.
Financial Strength Breakdown
ON Semiconductor Corp's Financial Strength rating is a testament to its resilient balance sheet and prudent capital management. An Interest Coverage ratio of 34.94 far exceeds the benchmark set by investing luminary Benjamin Graham, indicating a strong ability to meet interest obligations. The company's Altman Z-Score of 5.92 suggests a low probability of financial distress, while a Debt-to-Revenue ratio of 0.41 reflects a strategic approach to debt management.
Profitability Rank Breakdown
ON Semiconductor Corp's Profitability Rank is impressive, with an Operating Margin that has significantly increased over the past five years, indicating enhanced efficiency in generating profits. The company's Gross Margin has also consistently risen, further demonstrating its ability to convert revenue into profit. A Predictability Rank of 3.5 stars out of five adds to investor confidence by highlighting consistent operational performance.
Growth Rank Breakdown
ON Semiconductor Corp's high Growth Rank reflects its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 13.8% is competitive within the Semiconductors industry. Additionally, a significant increase in EBITDA over the past few years, with a three-year growth rate of 46 and a five-year rate of 24.6, highlights ON Semiconductor Corp's growth capabilities.
Conclusion: A Strong Investment Prospect
Considering ON Semiconductor Corp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking companies with similar robust financial health and growth prospects can explore more options using the GF Score Screen. With its strategic focus on high-growth areas and solid financial foundation, ON Semiconductor Corp stands as a compelling investment case for those looking to capitalize on the semiconductor industry's future.
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.
