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    Stock Alert for ON Semiconductor Corp. (ONNN)

    ON Semiconductor Corp. (ONNN) is a supplier of high performance silicon solutions for energy efficient electronics. The Company’s broad portfolio of power and signal management, logic, discrete and custom devices helps customers efficiently solve their design challenges in automotive, communications, computing, consumer, industrial, LED lighting, medical, military/aerospace and power applications. ONNN operates a world-class, value-added supply chain and a network of manufacturing facilities, sales offices and design centers in key markets throughout North America, Europe and the Asia Pacific regions.

    Share Statistics (08-Sept-11) FY2009 FY2010 % Chg Q32010 Q32011 % Chg
    Symbol ONNN Revenue, $Mn 1.77B 2.31B 30.5% 583.30 905.80 55.3%
    Current price $7.20 Gross marg. 35.1% 41.3% 17.7% 41.8% 29.4% -29.7%
    52wk Range: $6.07-$11.95 Oper. margin 16.2% 6.3%
    Avg Vol (3m): 7,428,690 Net margin 3.4% 12.6% 270.6% 13.5% 4.5% -66.7%
    Market Cap. 3.23B
    Shares Outstanding 448.32M EPS, $ 0.19 0.73 284.2% 0.18 0.09 -50.0%

    Source: Reuters.com, SEC Filings.

    Investment Highlights

    Shares of ONNN gained 1.6% in the last five trading days and 5.1% in the last month.  Year-to-date, the stock is up 13.0%.

    The energy-management chip maker last month reported its total revenues in the second quarter increased nearly 4% to $905.8 million quarter-over-quarter, a record quarterly result for the Company.

    During the second quarter of 2011, the Company reported GAAP net income of $41.0 million, or $0.09 per fully diluted share.  The second quarter 2011 GAAP net income included net charges of $73.4 million, or $0.16 per fully diluted share, from special items.  During the first quarter of 2011, the Company reported a GAAP net income of $82.6 million, or $0.18 per fully diluted share.

    The Company said it gross profit and net income for the quarter were slightly less than anticipated due to a more adverse impact from the March 2011 earthquake and resulting tsunami in Japan, as well as manufacturing cost increases from commodity prices and foreign currencies.

    Second quarter 2011 non-GAAP net income was $114.4 million, or $0.25 per share on a fully diluted basis. First quarter 2011 non-GAAP net income was $121.2 million, or $0.27 per share on a fully diluted basis.

    On a mix-adjusted basis, average selling prices for ONNN in the second quarter of 2011 were approximately flat when compared to the first quarter of 2011. Total company GAAP gross margin in the second quarter was 29.4%, which included a net charge of approximately $53.0 million, or approximately 580 basis points, from special items.  Total company non-GAAP gross margin in the second quarter was 35.2%.

    Adjusted EBITDA for the second quarter of 2011 was $176.5 million, compared to $167.3 million reported for the first quarter of 2011.

    President and CEO Keith Jackson said ONNN’s revenues for Japan began to stabilize in May and the Company currently expects to see some slight revenue growth in its overall SANYO Semiconductor business in the third quarter of 2011 compared to the second quarter of 2011.

    “Thanks in large part to the great efforts and teamwork of our employees, all of our factories in Japan were capable of full production during the second half of May.  Semiconductor manufacturing cycle times, however, have a lag between when the factories can begin full production and when those final products can be shipped to customers.  In the third quarter, we expect a modest impact to revenues from this lost production,” Jackson stated.

    For the third quarter of 2011,  ONNN believes it is prepared to support higher growth if higher demand materializes.  The Company anticipates revenues will be  in the range of $895 to $925 million in the current quarter based upon product booking trends, backlog levels and estimated turns levels.

    “Backlog levels for the third quarter of 2011 represent approximately 90 percent of our anticipated third quarter 2011 revenues.  We expect that average selling prices for the third quarter of 2011 will be flat to down approximately one percent when compared to the second quarter of 2011.  The non-GAAP outlook for the third quarter of 2011 includes stock-based compensation expense of approximately $12 million.”

    Source: http://www.onsemi.com/PowerSolutions/newsItem.do?article=2574

    Financial Strength (08-Sept-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 1.20 2.73 2.02 0.76
    Current Ratio (MRQ) 1.77 3.32 2.61 1.11
    LT Debt to Equity (MRQ) 63.85 21.87 12.47 111.59
    Total Debt to Equity (MRQ) 82.18 43.65 22.50 150.47
    Interest Coverage (TTM) 4.56 3.53 0.94 23.18

    Source: Reuters.com, SEC Filings.

    Analyst ConsensusAnalyst Recommendations and Revisions

    1-5 Linear Scale

    Current

    1 Month
    Ago

    2 Month
    Ago

    3 Month
    Ago

    (1) BUY 12 10 14 14
    (2) OUTPERFORM 3 3 3 3
    (3) HOLD 7 9 5 5
    (4) UNDERPERFORM 0 0 0 0
    (5) SELL 0 0 0 0
    No Opinion 0 0 0 0
    Mean Rating 1.77 1.95 1.59 1.59

    Source: markets.ft.com

    Consensus Estimates Analysis

    # of Estimates

    Mean

    High

    Low

    1 Year Ago

    SALES (in millions)
    Quarter Ending Sep-11 21 912.24 967.60 895.00 618.08
    Quarter Ending Dec-11 21 913.79 976.90 859.00 627.47
    Year Ending Dec-11 21 3,601.27 3,697.10 3,531.00 2,378.08
    Year Ending Dec-12 21 3,770.36 4,037.70 3,591.90 2,570.74
    EARNINGS (per share)
    Quarter Ending Sep-11 21 0.24 0.31 0.13 0.28
    Quarter Ending Dec-11 21 0.26 0.34 0.16 0.28
    Year Ending Dec-11 21 0.99 1.10 0.41 1.03
    Year Ending Dec-12 21 1.19 1.40 0.90 1.17
    LT Growth Rate (%) 5 12.80 15.00 10.00 13.75

    Technical Analysis

    Source: http://stockcharts.com

    ONNN is within its Bollinger Bands. This is a normal condition suggesting that it is neither overbought nor oversold relative to the recent levels.

    ONNN is below its 20-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

    ONNN’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Sept08-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Fairchild Semiconductor International Inc. FCS 12.40 1.58B 8.05 7.75 0.93 0.89
    Texas Instruments Inc. TXN 26.05 30.10B 11.38 10.18 2.17 2.08
    STMicroelectronics NV STM 6.08 5.38B 8.94 7.60 0.53 0.49
    Semiconductor – Broad Line Median       12.50 n/a 1.63 n/a
    ON Semiconductor Corp. ONNN 7.20 3.23B 7.06 6.05 0.90 0.86

    Source: Thomson Financial

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