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ON Semiconductor Corp. (ON) Up 14.6% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for ON Semiconductor Corp. (ON). Shares have added about 14.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ON Semiconductor Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

onsemi's Q3 Earnings & Revenues Top Estimates, Up Y/Y

onsemi reported third-quarter 2022 non-GAAP earnings of $1.45 per share, outpacing the Zacks Consensus Estimate by 10.69% and surging 87% year over year.

Revenues of $2.19 billion beat the Zacks Consensus Estimate by 3.6% and improved 26% on a year-over-year basis.

Top-Line Details

Power Solutions Group revenues of $1.12 billion (accounting for 50.9% of revenues) increased 25.1% year over year.

Advanced Solutions Group revenues of $734.3 million (33.5% of revenues) increased 19.7% on a year-over-year basis.

Intelligent Sensing Group revenues of $342.2 million (15.6% of revenues) jumped 44.7% year over year.

In terms of end markets, Automotive (39.8% of revenues) revenues were $873.6 million, up 51.8% year over year. Industrial (28% of revenues) end-market (including military, aerospace and medical) revenues increased 27.8% year over year to $613.2 million. Other (32.2% of revenues) end-market revenues grew 2.8% year over year to $705.8 million.

Operating Details

Non-GAAP gross margin was 49.3% compared with the year-ago quarter’s 41.5%.

Non-GAAP operating expenses increased 0.4% year over year to $299.8 million.

Non-GAAP operating margin was 35.4%, up from the year-ago quarter’s figure of 24.5%, courtesy of a higher revenue base and improvements in gross margin.

Balance Sheet & Cash Flow

As of Sep 30, 2022, onsemi had cash and cash equivalents of $2.45 billion compared with $1.79 billion on Jul 1, 2022.

Total debt (including the current portion), as of Sep 30, 2022, was $3.21 billion, unchanged from the reported figure on Jul 1, 2022.

Third-quarter 2022 cash flow from operations amounted to $1 billion compared with the previous quarter’s reported figure of $420.8 million.

Free cash flow amounted to $731.3 million compared with $202.7 million in the previous quarter.

Guidance

For fourth-quarter 2022, onsemi expects revenues between $2.01 billion and $2.14 billion.

Non-GAAP gross margin is projected in the range of 47-49%.

Non-GAAP operating expenses are expected in the range of $305-$320 million.

Non-GAAP earnings are envisioned between $1.18 per share and $1.34 per share.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

Currently, ON Semiconductor Corp. has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

ON Semiconductor Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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