Onto Innovation (ONTO): Assessing Valuation as Shares Rally 30% in One Month

Onto Innovation (ONTO) has drawn investor attention lately thanks to steady growth trends across its annual results. Over the past month, shares have gained nearly 30%, which highlights renewed confidence in the company’s direction.

See our latest analysis for Onto Innovation.

After a tough start to the year, Onto Innovation’s momentum has picked up dramatically, with a 29.8% one-month share price return driving renewed optimism despite a 35.3% decline in total shareholder return over the past year. Longer-term investors are still well ahead, supported by a remarkable 118% three-year total shareholder return. This suggests that recent volatility may be a pause within a much broader growth story.

If this upward swing has sparked your interest, it might be the perfect time to discover See the full list for free.

But with shares up so sharply, the key question now is whether Onto Innovation is trading below its true value or if the current price already reflects all expected future growth. This leaves investors wondering if there is more upside.

Most Popular Narrative: Fairly Valued

Onto Innovation's current share price of $135.11 is very close to the most popular narrative's fair value estimate of $133.75. This creates a tight valuation debate for investors.

The accelerating adoption of AI packaging and advanced 2.5D/3D logic architectures is driving a major step up in demand for Onto Innovation's next-generation Dragonfly systems. Strong customer pull and new applications are expanding both revenue and potential gross margin through higher ASPs and increased market share within leading-edge chip production.

Read the complete narrative.

Is a next-gen product cycle about to unlock multi-year growth and margin expansion? The narrative leans on future gains in key metrics yet to be revealed. What game-changing assumptions fuel this fair value? Explore and decide for yourself.

Result: Fair Value of $133.75 (ABOUT RIGHT)

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

However, a slower-than-expected demand rebound or ongoing geopolitical uncertainties could undermine the growth story and challenge bullish expectations for Onto Innovation.

Find out about the key risks to this Onto Innovation narrative.

Another View: Our DCF Model Finds Undervaluation

While the most popular narrative sees Onto Innovation as fairly valued based on price-to-earnings, our SWS DCF model offers a different perspective. Using cash flow forecasts, the DCF model estimates Onto’s fair value at $150.59, which is around 10% above today’s share price. Could the market be missing future upside?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Onto Innovation Narrative

If you see things differently or want to dive into your own analysis, you can build a personal narrative in just minutes. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Onto Innovation.

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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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