ON Semiconductor (NASDAQ:ON) turned in a solid report card for the second quarter of 2018. In spite of a brewing trade war between the U.S. and China, ON posted results at the top of its previous guidance range and boosted its outlook for the rest of 2018.

ON shares have struggled to hold onto gains so far this year -- and were down even after the earnings report -- but the company's results and forecast should go a long way toward assuaging investors' fears.

The numbers

Metric

Q2 2018

Q2 2017

Year-Over-Year Change

Revenue

$1.46 billion

$1.34 billion

9%

Gross profit margin

38.1%

36.8%

N/A

Operating profit margin

13.5%

11.5%

N/A

Net income

$155.3 million

$93.9 million

65.4%

Earnings per share

$0.35

$0.22

59.1%

Data source: ON Semiconductor quarterly earnings.

ON's revenue for the quarter came in at the top of the guidance range given three months ago, while gross margin was in the middle of the range. Earnings (adjusted for one-time items) slightly beat consensus analyst expectations and notched a big year-over-year increase.

The second quarter was also a big improvement over the beginning of 2018, when revenue declined slightly year over year, stoking worries that ON's growth was finished. Slowing sales in the auto industry and worries over trade tensions between the U.S. and China have weighed on ON's stock this year.

That's understandable, as sales to auto manufacturers have accounted for 32% of revenue when broken down by industry through the first two quarters. Furthermore, sales to Asia (excluding Japan) have been no less than 60% of revenue when broken down by geography, with the second-quarter split coming in at 61%.

Those worries were shrugged off by management, though, as demand for more advanced chips like power management and image sensors for driver-assist systems in cars continued to rise. Additionally, ON predicts that its full-year cash tax rate will be less than 10%, as it is set to benefit this year from U.S. corporate tax reform.

An artist's rendition of various items getting an internet-connection-enabling chip embedded in them. Objects illustrated include cars, cameras, and homes.

Image source: Getty Images.

What comes next?

If the second-quarter results weren't enough to put investors at ease, ON's guidance was also a positive sign that trade tensions aren't a concern yet. Revenue is expected to be 7% to 10% higher year over year in the third quarter. Operating expense should be flat to only 5.5% higher, supporting another profit increase.

ON shares are trading for just 13 times adjusted trailing earnings. That's an inexpensive price to pay for a company that is posting solid sales growth and big bottom-line expansion.

Global trade disputes will likely continue making headlines this year, but ON Semiconductor just demonstrated that it can still thrive in such an uncertain environment. This good news should go a long way in getting the stock back into growth mode after a volatile first half of the year.

Nicholas Rossolillo and his clients own shares of ON Semiconductor. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.