ON Semiconductor Corporation (NASDAQ:ON) has attracted a lot of attention over the past few months as it has seen significant price fluctuations on the NASDAQGS, rising to a high of US$78.74 at one point before falling to a low of US$66.39. Depending on the share price fluctuations, it could open up opportunities for investors to enter the stock and buy at a lower price. The question to answer is whether ON Semiconductor’s current trading price of US$71.08 reflects what this large cap stock is actually worth, or is it currently undervalued, offering a buying opportunity? Let’s examine ON Semiconductor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price movement.
Read our latest analysis for ON Semiconductor
What is the opportunity for ON Semiconductor?
Good news for investors. ON Semiconductor is still trading at a fairly cheap price according to our price-to-earnings model (comparing the company’s price-to-earnings ratio to the industry average). In this example, we used the price-to-earnings (PE) ratio because we don’t have enough information to reliably forecast the stock’s cash flows. ON Semiconductor’s ratio of 15.72x is below its peer group average of 27.93x, indicating a low stock price relative to the semiconductor industry. However, ON Semiconductor’s stock price is fairly volatile (i.e., its stock price fluctuations have been magnified relative to the overall market), which means the stock price may fall further, providing another buying opportunity in the future. This is based on its high beta, which is a good indicator of share price volatility.
Can we expect growth from ON Semiconductor?
Future outlook is an important aspect when considering buying a stock, especially for investors looking for growth in their portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment. So, let’s also take a look at the company’s future prospects. ON Semiconductor’s earnings are expected to grow by 38% over the next few years, which gives us a very optimistic future. This should generate more robust cash flows, which should lead to a higher share price.
What this means for you
Are you a shareholder? ON is currently trading below its industry P/E ratio, so now may be a good time to increase your holdings. While the outlook is bright, it appears this growth has not yet been fully priced into the share price. However, other factors that may explain the current price multiple should also be considered, such as capital structure.
Are you a potential investor? If you’ve been keeping an eye on ON for a while, now might be the time to buy its shares. It’s not too late to buy ON, as the company’s future earnings prospects are not yet fully reflected in the current share price. However, before making an investment decision, consider other factors, such as the strength of the company’s balance sheet, to make an informed assessment.
With this in mind, if you want to analyse this company further, it’s important to know about the risks involved. We’ve spotted 1 warning sign for ON Semiconductor that you should be aware of.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
