ON Semiconductor (ON): Assessing Value After Recent Share Price Declines

ON Semiconductor (ON) shares were in focus this week as investors took stock of the company’s recent performance. The semiconductor maker’s stock has seen double-digit losses over the past month, which has prompted discussion about its next steps.

See our latest analysis for ON Semiconductor.

While ON Semiconductor’s 1-day share price return of -2.65% and a 7-day slide of -6.71% are grabbing attention, what really stands out is the broader picture: the company faces a year-to-date share price return of -27.24% with the 1-year total shareholder return falling to -34.42%. Momentum has clearly cooled compared to its strong five-year total shareholder return of 57.10%, which underscores a shift in sentiment as investors weigh recent volatility against the company’s longer-run growth.

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With shares trading well below analysts' average price target and the company showing impressive net income growth, the big question remains: Is ON Semiconductor an undervalued opportunity, or is the market already factoring in future gains?

Most Popular Narrative: 23.5% Undervalued

Market participants are weighing ON Semiconductor's closing price of $44.90 against a fair value estimate of $58.67, signaling notable upside according to the most widely followed narrative. The gap between current levels and this projected value stems from expectations of transformative business shifts and future earnings power that are stirring debate among analysts.

ON Semiconductor's expanding partnerships and design wins in EV platforms (notably in China) and its increased penetration into next-generation automotive and hybrid vehicle systems position the company to capitalize on the accelerating shift to electrified and autonomous transportation. These tailwinds are likely to drive higher recurring revenues and improved top-line growth.

Read the complete narrative.

A key controversy: this fair value is built on bold assumptions about where both profits and revenue margins will be a few years from now. Which levers of growth are given outsized weight, and can current headwinds slow that momentum? The story behind this number is filled with high-stakes forecasts, margin shifts, and bets on sector leadership. Discover what really drives this projection inside the full narrative.

Result: Fair Value of $58.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent manufacturing underutilization and heightened competition in EV and AI markets remain significant risks that could disrupt ON Semiconductor’s growth projections.

Find out about the key risks to this ON Semiconductor narrative.

Another View: Multiples Tell a Different Story

While the fair value approach points toward ON Semiconductor being undervalued, a look at its price-to-earnings ratio puts things in a different light. With a current PE of 56.6x, ON trades significantly above the industry average of 32.8x and its fair ratio of 53.9x. This suggests that the market may still be pricing in high expectations. Does this signal added risk, or do investors see growth that the numbers do not yet capture?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own ON Semiconductor Narrative

If the consensus doesn’t match your analysis, or if you prefer to dig into the numbers yourself, you can craft your own view in just a few minutes. Do it your way.

A great starting point for your ON Semiconductor research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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