ON Semiconductor Corporation (NASDAQ:ON) has received a lot of attention over the past few months due to a significant price movement on the NASDAQGS. The price rose to $78.74 at one point and then fell to the low of $66.39. Some price action can provide investors with a better opportunity to enter the stock and potentially buy it at a lower price. A question to answer is whether ON Semiconductor’s current trading price of $71.08 reflects the actual value of the large-cap stock. Or is it currently undervalued and giving us a buying opportunity? Let’s take a look at ON Semiconductor’s outlook and value based on the latest financial data to see if there are any catalysts for a price change.
Check out our latest analysis for ON Semiconductor
What opportunities does ON Semiconductor offer?
Great news for investors – ON Semiconductor is still trading at a relatively cheap price according to our price multiple model, where we compare the company’s price-to-earnings ratio to the industry average. In this case, we used the price-to-earnings (P/E) ratio because there is not enough information to reliably forecast the stock’s cash flows. We note that ON Semiconductor’s ratio of 15.72x is below its peers’ average of 27.93x, suggesting that the stock is trading at a lower price relative to the semiconductor industry. However, since ON Semiconductor’s stock is relatively volatile (i.e., its price fluctuations are more pronounced relative to the rest of the market), this could mean that the price can fall even further, giving us 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 prospects are an important aspect when you want to buy stocks, especially if you are an investor looking for growth for your portfolio. Buying a great company with solid prospects at a cheap price is always a good investment. So let’s also take a look at the company’s future expectations. ON Semiconductor’s earnings are expected to grow 38% over the next few years, suggesting a very optimistic future. This should lead to more robust cash flows and result in a higher share value.
What this means for you
Are you a shareholder? With ON currently trading below the industry P/E, it could be a good time to buy more shares of the stock. With the positive outlook on the horizon, this growth does not seem to be fully reflected in the share price yet. However, there are other factors to consider, such as the capital structure, that could explain the current price multiple.
Are you a potential investor? If you have been keeping an eye on ON for some time, now could be the right time to get into the stock. The strong future earnings outlook is not yet fully reflected in the current share price, which means it is not too late to buy ON. However, before making an investment decision, you should consider other factors such as the strength of the balance sheet to make an informed assessment.
Therefore, if you want to carry out further analysis of the company, it is important to be aware of the risks involved. You will be interested to know that we found out the following: 1 warning sign for ON Semiconductor and you want to know about it.
If you are no longer interested in ON Semiconductor, you can use our free platform to see our list of over 50 other stocks with high growth potential.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
