ON Semiconductor Stock Testing Price Floor, Buy or Wait?
ON Semiconductor (ON) stock should be on your watchlist. Here is why – it is currently trading in the support zone ($50.32 – $55.62), levels from which it has bounced meaningfully before. In the last 10 years, ON Semiconductor stock received buying interest at this level 4 times and subsequently went on to generate 51.9% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 10/29/2021 | 47.6% | 67 |
| 4/11/2022 | 26.1% | 56 |
| 7/7/2022 | 107.8% | 390 |
| 6/5/2025 | 26.1% | 47 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For ON Read Buy or Sell ON Stock to see how convincing this buy opportunity might be.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Let us ask you this: Over the last 5 years, which index do you think the Trefis High Quality Portfolio outperformed – the S&P 500, S&P 1500 Equal Weighted, or both? The answer might surprise you. See how our advisory framework helps stack the odds in your favor.
Here are some quick data points for ON Semiconductor that should help decision:
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- Revenue Growth: -17.9% LTM and -5.0% last 3 year average.
- Cash Generation: Nearly 20.1% free cash flow margin and 17.5% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for ON was -17.9%.
- Valuation: ON stock trades at a PE multiple of 47.1
- Opportunity vs S&P: Compared to S&P, you get higher valuation, lower revenue growth, and better free cash flow and operating margins
For quick background, ON Semiconductor provides intelligent sensing and power solutions enabling automotive electrification, fast-charging systems, and sustainable energy for solar, industrial power, and storage applications worldwide.
| ON | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Semiconductors | – |
| PE Ratio | 47.1 | 23.9 |
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| LTM* Revenue Growth | -17.9% | 5.2% |
| 3Y Average Annual Revenue Growth | -5.0% | 5.3% |
| Min Annual Revenue Growth Last 3Y | -17.9% | -0.1% |
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| LTM* Operating Margin | 17.5% | 18.6% |
| 3Y Average Operating Margin | 26.6% | 17.8% |
| LTM* Free Cash Flow Margin | 20.1% | 13.2% |
*LTM: Last Twelve Months
What Is Stock-Specific Risk If The Market Crashes?
That said, ON isn’t immune to big sell-offs. It plunged nearly 94% in the Dot-Com Bubble and almost 80% during the Global Financial Crisis. Even the Covid drop wasn’t minor, with a 67% slide. The 2018 correction and the recent inflation shock still knocked it down 45% and 42%, respectively. So, even with strong fundamentals, this stock has shown serious vulnerability when markets turn south.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read ON Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.