How Low Can ON Semiconductor Go?

Shares of ON Semiconductor (Nasdaq: ONNN  ) hit a 52-week low yesterday. Let's look at how it got here and whether dark clouds are ahead.

How it got here
The Thai floods last year had widespread consequences throughout the tech world, but ON Semiconductor got hit head-on with the catastrophe. The company provided an update in October, and its Sanyo division's Thailand operations had to be suspended because of the severe damage.

At the time, ON Semiconductor estimated that the disruptions would negatively affect revenue for three to four quarters, and 10% to 12% of total output was produced at its Rojana Industrial Park facilities that were damaged. The company predicted $40 million to $60 million of lost revenue per quarter.

More recently, ON Semiconductor reported first-quarter earnings about a month ago, with revenue of $744.4 million and non-GAAP earnings per share of $0.12. CEO Keith Jackson said the overall business had stabilized and is confident that the broader sector has bottomed out. The company expects second-quarter sales to be in the range of $745 million to $785 million.

How it stacks up
Let's see how ON Semiconductor stacks up with some of its semiconductor peers.

ONNN Chart

ONNN data by YCharts

We'll add in some additional fundamental metrics for deeper insight.

Company

P/E (TTM)

Sales Growth (MRQ)

Net Margin (TTM)

ROE (TTM)

ON Semiconductor 79.7 (14.5%) 1.3% 2.6%
Fairchild Semiconductor (NYSE: FCS  ) 15.7 (14.7%) 6.8% 8.1%
STMicroelectronics (NYSE: STM  ) 7.0 (20.4%) 0.6% 8.0%
Texas Instruments (Nasdaq: TXN  ) 17.4 (8.0%) 13.6% 16.7%

Source: Reuters. TTM = trailing 12 months. MRQ = most recent quarter.

The broader semiconductor industry is definitely seeing a slowdown as many players are seeing their top lines shrink. Stalwart TI is getting better than the smaller players, while STMicroelectronics has lost nearly three-quarters of its value over the past five years. Fairchild is cheaper than ON Semiconductor relative to its earnings, and it's also more profitable.

What's next?
The sector has seen some troubles as a glut of inventories has been hurting many players, but as those levels wind down, the semis should start to resume their growth. Don't forget to add these companies to your watchlist to keep an eye on the recovery within the semiconductor market.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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Related Tickers

10/1/2014 3:59 PM
ONNN $8.77 Down -0.17 -1.90%
ON Semiconductor C… CAPS Rating: *****
FCS $15.27 Down -0.26 -1.67%
Fairchild Semicond… CAPS Rating: ***
STM $7.58 Down -0.11 -1.43%
STMicroelectronics… CAPS Rating: **
TXN $46.88 Down -0.81 -1.70%
Texas Instruments,… CAPS Rating: ****

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