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- NasdaqGS:ON
At US$67.38, Is ON Semiconductor Corporation (NASDAQ:ON) Worth Looking At Closely?
ON Semiconductor Corporation (NASDAQ:ON) received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$104 at one point, and dropping to the lows of US$62.64. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether ON Semiconductor's current trading price of US$67.38 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at ON Semiconductor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for ON Semiconductor
What Is ON Semiconductor Worth?
Good news, investors! ON Semiconductor is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 13.04x is currently well-below the industry average of 23.89x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, ON Semiconductor’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from ON Semiconductor?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 22% over the next couple of years, the future seems bright for ON Semiconductor. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? Since ON is currently below the industry PE ratio, it may be a great time to increase your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current price multiple.
Are you a potential investor? If you’ve been keeping an eye on ON for a while, now might be the time to enter the stock. Its prosperous future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ON. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.
In light of this, if you'd like to do more analysis on the company, it's vital to be informed of the risks involved. While conducting our analysis, we found that ON Semiconductor has 1 warning sign and it would be unwise to ignore this.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NasdaqGS:ON
ON Semiconductor
Provides intelligent sensing and power solutions in the United States and internationally.
Very undervalued with flawless balance sheet.