ON Semiconductor Corp. (ON) Up 5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for ON Semiconductor Corp. (ON). Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ON Semiconductor Corp. due for a pullback? 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 catalysts.
onsemi Q1 Earnings Beat Estimates, Revenues Down Y/Y
onsemi reported first-quarter 2024 non-GAAP earnings of $1.08 per share, declining 9.2% year over year.
Revenues of $1.86 billion beat the Zacks Consensus Estimate by 0.61% but declined 4.9% on a year-over-year basis.
Top-Line Details
Power Solutions Group revenues of $874.2 million (accounting for 47% of revenues) increased 1.6% year over year.
Analog & Mixed Group revenues of $697 million (37.4% of revenues) decreased 6.4% on a year-over-year basis.
Intelligent Sensing Group revenues of $291.5 million (15.6% of revenues) fell 17.7% year over year.
In terms of end markets, Automotive (54.6% of revenues) revenues were $1.02 billion, up 3.2% year over year.
Industrial (25.6% of revenues) end-market (including military, aerospace and medical) revenues decreased 14.4% year over year to $476.1 million.
Others (19.8% of revenues) end-market revenues declined 11.5% year over year to $369.4 million.
Operating Details
Non-GAAP gross margin contracted 90 basis points (bps) year over year to 45.9%.
Non-GAAP operating expenses increased 10% year over year to $314.3 million.
Non-GAAP operating margin was 29%, down 320 bps on a year-over-year basis.
Balance Sheet & Cash Flow
As of Mar 29, 2024, onsemi had cash and cash equivalents of $2.61 billion compared with $2.48 billion as of Dec 31, 2023.
Total debt (including the current portion), as of Mar 29, 2024, was $3.34 billion, unchanged sequentially.
First-quarter 2024 cash flow from operations amounted to $498.7 million compared with the previous quarter’s reported figure of $611.2 million.
Free cash flow amounted to $276.3 million compared with free cash flow of $220.7 million in the previous quarter.
Guidance
For the second quarter of 2024, onsemi expects revenues between $1.68 billion and $1.78 billion.
Non-GAAP gross margin is projected in the range of 44.2-46.2%.
Non-GAAP operating expenses are expected in the range of $313-$328 million.
Non-GAAP earnings are envisioned between 86 cents per share and 98 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -7.34% due to these changes.
VGM Scores
At this time, ON Semiconductor Corp. has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ON Semiconductor Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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