It has been about a month since the last earnings report for ON Semiconductor Corp. (ON). Shares have added about 6.1% in that time frame, outperforming 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 drivers.
onsemi's Q1 Earnings Beat Estimates, Revenues Up Y/Y
onsemi reported first-quarter 2023 non-GAAP earnings of $1.19 per share, outpacing the Zacks Consensus Estimate by 2% but declining 2.5% year over year.
Revenues of $1.96 billion beat the Zacks Consensus Estimate by 2% and improved 0.8% on a year-over-year basis.
Top-Line Details
Power Solutions Group revenues of $1.01 billion (accounting for 51.7% of revenues) increased 2.6% year over year.
Advanced Solutions Group revenues of $592.7 million (30.2% of revenues) decreased 14% on a year-over-year basis.
Intelligent Sensing Group revenues of $354.2 million (18.1% of revenues) jumped 31.7% year over year.
In terms of end markets, Automotive (50.3% of revenues) revenues were $986 million, up 38% year over year.
Industrial (28.4% of revenues) end-market (including military, aerospace and medical) revenues increased 6.6% year over year to $556.2 million.
Other (21.3% of revenues) end-market revenues declined 39.3% year over year to $417.5 million.
Operating Details
Non-GAAP gross margin contracted 260 basis points (bps) year over year to 46.8%.
Non-GAAP operating expenses decreased 5.5% year over year to $286 million.
Non-GAAP operating margin was 32.2%, down 170 bps on a year-over-year basis to 32.2%.
Balance Sheet & Cash Flow
As of Mar 31, 2023, onsemi had cash and cash equivalents of $2.70 billion compared with $2.92 billion on Dec 31, 2022.
Total debt (including the current portion), as of Mar 31, 2023, was $3.46 billion, up from $3.19 billion reported on Dec 31, 2022.
First-quarter 2023 cash flow from operations amounted to $408.9 million compared with the previous quarter’s reported figure of $731.3 million.
Free cash flow amounted to $87.4 million compared with $389.3 million in the previous quarter.
Guidance
For the second quarter of 2023, onsemi expects revenues between $1.98 billion and $2.08 billion.
Non-GAAP gross margin is projected in the range of 45.5-47.5%.
Non-GAAP operating expenses are expected in the range of $297-$312 million.
Non-GAAP earnings are envisioned between $1.14 per share and $1.28 per share.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 14.68% due to these changes.
VGM Scores
Currently, ON Semiconductor Corp. has a strong Growth Score of A, a grade with the same score on the momentum front. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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May 31, 2023 at 10:30PM
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ON Semiconductor Corp. (ON) Up 6.1% Since Last Earnings Report: Can It Continue? - Yahoo Finance
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