Value
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.6 |
| P/S | 6.3 |
| EV/EBITDA | 1.2 |
| Fwd P/E | 6.1 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 21.1x
- ▸PEG: 0.31
ON · Why this verdict
Why ON Semiconductor (ON) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The automotive end-market accounts for 51% of ON Semiconductor's revenue, creating concentration risk to the electric vehicle and advanced driver assistance systems demand cycle — a market that has shown significant volatility as EV adoption rates have moderated from peak expectations. Bear case | Automotive revenue concentration falls below 45% of total sales within 12 months as industrial and other end-markets grow faster than automotive. | →Stable |
| CounterAutomotive semiconductor content per vehicle is structurally growing as electrification and driver assistance systems proliferate, so concentration in automotive may represent a structural tailwind rather than a risk if the technology transition continues. | ||
Free cash flow conversion of 223% relative to net income and a Piotroski F-Score of 9/9 — the maximum possible — indicate that ON Semiconductor's financial reporting is conservative and the business generates significantly more cash than its accounting earnings suggest. Quality breakdown | Free cash flow conversion remains above 150% of net income over the next 4 reported quarters, confirming the durable quality of cash generation. | →Stable |
| CounterHigh free cash flow relative to earnings in a semiconductor company often reflects large depreciation charges on fabrication facilities that depress GAAP earnings without reducing cash, which is a structural feature rather than an earnings quality advantage. | ||
ON Semiconductor is trading 24% above the analyst consensus price target, creating a negative asymmetry ratio of -1.6 that means the stock offers significantly more downside to consensus than upside from current levels — a fundamental mismatch between current price and analyst-derived fair value. Warnings | Analyst price targets are revised upward by more than 30% within 12 months following a semiconductor cycle recovery that restores automotive and industrial demand. | →Stable |
| CounterStocks can trade above analyst targets for extended periods during strong industry cycles, and analyst targets in semiconductors often lag actual earnings potential at cycle peaks when pricing power and utilization rates are both elevated. | ||
The most recent quarter produced a massive earnings miss of -121%, meaning the company reported a loss when analysts expected a profit, which — even if partially explained by one-time charges — signals that demand conditions or cost structures have deteriorated more than the market had anticipated. Earnings | EPS turns positive in the next reported quarter and the subsequent quarter delivers a positive earnings surprise, indicating the large miss was a one-time event rather than a trend. | →Stable |
| CounterPrior quarters showed beats of +2.6%, +17.6%, and an inline result, suggesting the large miss may be an anomaly related to one-time inventory adjustments or restructuring charges rather than a fundamental business deterioration. | ||
The automotive end-market accounts for 51% of ON Semiconductor's revenue, creating concentration risk to the electric vehicle and advanced driver assistance systems demand cycle — a market that has shown significant volatility as EV adoption rates have moderated from peak expectations.
→StableBear case
- Expectation
- Automotive revenue concentration falls below 45% of total sales within 12 months as industrial and other end-markets grow faster than automotive.
CounterAutomotive semiconductor content per vehicle is structurally growing as electrification and driver assistance systems proliferate, so concentration in automotive may represent a structural tailwind rather than a risk if the technology transition continues.
Free cash flow conversion of 223% relative to net income and a Piotroski F-Score of 9/9 — the maximum possible — indicate that ON Semiconductor's financial reporting is conservative and the business generates significantly more cash than its accounting earnings suggest.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 150% of net income over the next 4 reported quarters, confirming the durable quality of cash generation.
CounterHigh free cash flow relative to earnings in a semiconductor company often reflects large depreciation charges on fabrication facilities that depress GAAP earnings without reducing cash, which is a structural feature rather than an earnings quality advantage.
ON Semiconductor is trading 24% above the analyst consensus price target, creating a negative asymmetry ratio of -1.6 that means the stock offers significantly more downside to consensus than upside from current levels — a fundamental mismatch between current price and analyst-derived fair value.
→StableWarnings
- Expectation
- Analyst price targets are revised upward by more than 30% within 12 months following a semiconductor cycle recovery that restores automotive and industrial demand.
CounterStocks can trade above analyst targets for extended periods during strong industry cycles, and analyst targets in semiconductors often lag actual earnings potential at cycle peaks when pricing power and utilization rates are both elevated.
The most recent quarter produced a massive earnings miss of -121%, meaning the company reported a loss when analysts expected a profit, which — even if partially explained by one-time charges — signals that demand conditions or cost structures have deteriorated more than the market had anticipated.
→StableEarnings
- Expectation
- EPS turns positive in the next reported quarter and the subsequent quarter delivers a positive earnings surprise, indicating the large miss was a one-time event rather than a trend.
CounterPrior quarters showed beats of +2.6%, +17.6%, and an inline result, suggesting the large miss may be an anomaly related to one-time inventory adjustments or restructuring charges rather than a fundamental business deterioration.
TrendMatrix Research · core thesis
Engine thesis — one sentence
ON Semiconductor carries excellent free cash flow conversion of 223% relative to net income and a perfect Piotroski F-Score of 9/9, but 51% of revenue comes from the automotive end-market creating concentration risk, the most recent quarter produced a large earnings miss of -121%, and the stock trades 24% above its analyst price target.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.5 |
| ROA | 4.6 |
| Gross margin | 4.5 |
| Op margin | 7.3 |
| Net margin | 4.7 |
| Current ratio | 8.1 |
| FCF quality | 10.0 |
| Moat | 5.2 |
| Piotroski F | 10.0 |
- ▸Excellent cash conversion: 223% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 9/9
Growth
3.7/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 3.7 |
Momentum
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.7 |
| MACD | 0.0 |
| OBV | 4.9 |
| MA position | 4.0 |
| Volume | 3.7 |
- ▸Uptrend pullback (RSI 38) - buy opportunity
- ▸Above 200-day MA
Sentiment
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.6 |
| Analyst rating | 7.5 |
| Price target | 8.1 |
- ▸Analyst upside: 24%
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $8,190,000 (0.023% of mkt cap)
Peer rank
3.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.3 |
| quality rank | 5.1 |
| growth rank | 1.7 |
Technical
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.0 |
| support resistance | 9.0 |
| 52w position | 3.5 |
Risk (lower is worse)
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.5 |
| days to cover | 8.1 |
| volatility | 0.0 |
| put call | 4.8 |
| implied vol | 0.0 |
| beta | 3.4 |
| debt equity | 8.2 |
- ▸High IV: 90%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.1 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.1<4.5
- ASYMMETRY:0.8<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.77
Upside
+11.6%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.98>1.3
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.1<4.5, ASYMMETRY:0.8<1.5@spot) reinforce the read. Current asymmetry R:R is 0.77 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.2, Sentiment at 7.1, and Catalyst at 6.4; the weakest are Peer rank at 3.0, Growth at 3.7, and Insider at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.77 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Automotive Revenue Concentration
Trip ifAutomotive end-market revenue rises above 55% of total revenue for 2 consecutive quarters, indicating concentration risk is increasing rather than diversifying.
- P2Fcf Conversion Piotroski Quality
Trip ifFree cash flow conversion falls below 100% of net income for 2 consecutive quarters, indicating the quality advantage has eroded.
- P3Target Exceeded Negative Asymmetry
Trip ifStock price rises above $140 without analyst target upgrades, pushing the negative asymmetry ratio below -2.0.
- P4Recent Earnings Miss Risk
Trip ifEPS surprise falls below -30% for 2 of the next 3 quarters, confirming the large miss was not a one-time event.