ON Semiconductor Corporation ON
Verdict: Sell. Fair value $58.08 against a price of $61.27 on 6 Jan 2026, 5% below the price.
In plain words
The case for: Narrow competitive moat provides durability. Industry tailwinds with growing market.
The case against: Intense competitive pressure could compress margins. Revenue has declined from a peak of $8.33B in 2022 to $7.08B in 2024, a 15% drop over two years..... The OCF/Net Income ratio dropped significantly from a strong 1.38 in 2022 to a weak 0.91 in 2023,....
Main risks
- Significant Revenue Decline: Revenue has contracted sharply from a peak of $8.33B in 2022 to a TTM of $6.19B, indicating a severe cyclical downturn or loss of market share.
- Value-Destructive ROIC: The current estimated ROIC of ~7.5% is below the estimated WACC of ~10.1%, suggesting that the company's overall capital base is not generating returns sufficient to cover its cost of capital.
- High Cyclicality and Uncertainty: The decelerating growth and neutral EPS revision trend highlight the company's vulnerability to the semiconductor industry cycle, making future performance difficult to predict.
- Revenue has declined from a peak of $8.33B in 2022 to $7.08B in 2024, a 15% drop over two years....
- Intense competitive environment
- Revenue has declined from a peak of $8.33B in 2022 to $7.08B in 2024, a 15% drop over two years. This indicates significant cyclical or competitive pressure.