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ON Semiconductor Corp. (ON) Down 15.4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for ON Semiconductor Corp. (ON - Free Report) . Shares have lost about 15.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ON Semiconductor Corp. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
onsemi’s Q4 Earnings & Revenues Top Estimates, Up Y/Y
onsemi reported fourth-quarter 2021 non-GAAP earnings of $1.09 per share, outpacing the Zacks Consensus Estimate by 15.96%. The company had reported earnings of 35 cents per share in the year-ago quarter.
Revenues of $1.85 billion beat the Zacks Consensus Estimate by 3.07% and improved 27.6% on a year-over-year basis. The top line benefited from an increase in supply, and favorable mix and pricing across all end-markets served.
onsemi’s fourth-quarter results were mainly driven by a strong demand environment, particularly for power and sensing products in automotive and industrial end markets.
Top-Line Details
Power Solutions Group or PSG revenues of $953.3 million (accounting for 51.6% of revenues) surged 33.1% year over year, courtesy of strength in automotive and industrial end markets.
Advanced Solutions Group or ASG revenues of $647.3 million (35.1% of revenues) increased 24% on a year-over-year basis, driven by robust automotive and computing end markets.
Intelligent Sensing Group or ISG revenues of $245.4 million (13.3% of revenues) improved 18% year over year, primarily driven by a strong automotive end market.
In terms of end markets, Automotive (34.7% of revenues) revenues were $641 million, up 30.2% year over year. Industrial (28.3% of revenues) end-market (includes military, aerospace and medical) revenues increased 42.2% year over year to $522 million. Other (37% of revenues) end-market revenues grew 16.4% year over year to $683 million.
Operating Details
Non-GAAP gross margin was 45.1% compared with the year-ago quarter’s 34.4%. The improvement was led by a favorable mix of higher-margin products, pricing and efficiency in manufacturing.
Non-GAAP operating expenses declined 3.6% year over year to $306.4 million.
Non-GAAP operating margin was 28.6%, significantly up from the year-ago quarter’s figure of 14.2%, courtesy of a higher revenue base and improvement in gross margin.
Balance Sheet & Cash Flow
As of Dec 31, 2021, onsemi had cash and cash equivalents of $1.35 billion compared with $1.39 billion on Oct 1, 2021.
Total debt (including current portion) as of Dec 31, 2021 was $3.07 billion, down from $3.11 billion reported on Oct 1, 2021.
Fourth-quarter 2021 cash flow from operations amounted to $626.6 million compared with the previous quarter’s reported figure of $448.9 million.
Capital expenditures for the quarter were $169.6 million, which equate to a capital intensity of 9%. onsemi is spending a major part of its capital expenditure toward enabling its 300-millimeter capability at the East Fishkill fab and the expansion of its silicon carbide capacity.
Free cash flow amounted to $457 million compared with $355.7 million in the previous quarter.
Guidance
For first-quarter 2022, onsemi expects revenues between $1.85 billion and $1.95 billion.
Non-GAAP gross margin is projected in the range of 45.5-47.5%.
Non-GAAP operating expenses are expected to be $298-$313 million.
Non-GAAP earnings are envisioned between 98 cents and $1.10 per share.
For 2022, onsemi expects gross margin in the range of 46.5-47.5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 27.68% due to these changes.
VGM Scores
At this time, ON Semiconductor Corp. has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise ON Semiconductor Corp. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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ON Semiconductor Corp. (ON) Down 15.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for ON Semiconductor Corp. (ON - Free Report) . Shares have lost about 15.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ON Semiconductor Corp. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
onsemi’s Q4 Earnings & Revenues Top Estimates, Up Y/Y
onsemi reported fourth-quarter 2021 non-GAAP earnings of $1.09 per share, outpacing the Zacks Consensus Estimate by 15.96%. The company had reported earnings of 35 cents per share in the year-ago quarter.
Revenues of $1.85 billion beat the Zacks Consensus Estimate by 3.07% and improved 27.6% on a year-over-year basis. The top line benefited from an increase in supply, and favorable mix and pricing across all end-markets served.
onsemi’s fourth-quarter results were mainly driven by a strong demand environment, particularly for power and sensing products in automotive and industrial end markets.
Top-Line Details
Power Solutions Group or PSG revenues of $953.3 million (accounting for 51.6% of revenues) surged 33.1% year over year, courtesy of strength in automotive and industrial end markets.
Advanced Solutions Group or ASG revenues of $647.3 million (35.1% of revenues) increased 24% on a year-over-year basis, driven by robust automotive and computing end markets.
Intelligent Sensing Group or ISG revenues of $245.4 million (13.3% of revenues) improved 18% year over year, primarily driven by a strong automotive end market.
In terms of end markets, Automotive (34.7% of revenues) revenues were $641 million, up 30.2% year over year. Industrial (28.3% of revenues) end-market (includes military, aerospace and medical) revenues increased 42.2% year over year to $522 million. Other (37% of revenues) end-market revenues grew 16.4% year over year to $683 million.
Operating Details
Non-GAAP gross margin was 45.1% compared with the year-ago quarter’s 34.4%. The improvement was led by a favorable mix of higher-margin products, pricing and efficiency in manufacturing.
Non-GAAP operating expenses declined 3.6% year over year to $306.4 million.
Non-GAAP operating margin was 28.6%, significantly up from the year-ago quarter’s figure of 14.2%, courtesy of a higher revenue base and improvement in gross margin.
Balance Sheet & Cash Flow
As of Dec 31, 2021, onsemi had cash and cash equivalents of $1.35 billion compared with $1.39 billion on Oct 1, 2021.
Total debt (including current portion) as of Dec 31, 2021 was $3.07 billion, down from $3.11 billion reported on Oct 1, 2021.
Fourth-quarter 2021 cash flow from operations amounted to $626.6 million compared with the previous quarter’s reported figure of $448.9 million.
Capital expenditures for the quarter were $169.6 million, which equate to a capital intensity of 9%. onsemi is spending a major part of its capital expenditure toward enabling its 300-millimeter capability at the East Fishkill fab and the expansion of its silicon carbide capacity.
Free cash flow amounted to $457 million compared with $355.7 million in the previous quarter.
Guidance
For first-quarter 2022, onsemi expects revenues between $1.85 billion and $1.95 billion.
Non-GAAP gross margin is projected in the range of 45.5-47.5%.
Non-GAAP operating expenses are expected to be $298-$313 million.
Non-GAAP earnings are envisioned between 98 cents and $1.10 per share.
For 2022, onsemi expects gross margin in the range of 46.5-47.5%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 27.68% due to these changes.
VGM Scores
At this time, ON Semiconductor Corp. has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise ON Semiconductor Corp. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.