This small semiconductor company beat analysts’ estimates by $0.02 last quarter, and Wall Street is forecasting double-digit growth for the next five years.
ON Semiconductor (ON)
From Dow Theory Forecasts
ON Semiconductor (ON) delivered solid March-quarter results and upbeat guidance for the June quarter, reflecting robust demand for its sensors and power-management components in automotive, industrial, and computing products.
The company, which acquired Fairchild Semiconductor in September, said per-share profits doubled to $0.18 last quarter. Revenue surged 76%. Operating cash flow rose 34% in the 12 months ending March, while free cash flow has more than doubled to $484 million. Analyst estimates are rising after management said sales should climb 35% to 40% in the June quarter.
With a stock-market value of $6.3 billion, ON is a small player in the volatile, highly cyclical semiconductor industry. But its shares look unduly cheap, trading below 12 times estimated 2017 profits, versus an industry median of 19.
The consensus anticipates 41% higher per-share profits for the year. ON, earning a Quadrix® Overall rank of 91, joins the Buy and Long-Term Buy lists.
Richard J. Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, May 15, 2017