ON Semiconductor Corporation's (NASDAQ:ON) Stock's On An Uptrend: Are Strong Financials Guiding The Market?
ON Semiconductor Corporation's (NASDAQ:ON) Stock's On An Uptrend: Are Strong Financials Guiding The Market?
ON Semiconductor (NASDAQ:ON) has had a great run on the share market with its stock up by a significant 7.6% over the last month. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. In this article, we decided to focus on ON Semiconductor's ROE.
Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Simply put, it is used to assess the profitability of a company in relation to its equity capital.
View our latest analysis for ON Semiconductor
How To Calculate Return On Equity?
Return on equity can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity
So, based on the above formula, the ROE for ON Semiconductor is:
30% = US$1.7b ÷ US$5.7b (Based on the trailing twelve months to September 2022).
The 'return' is the income the business earned over the last year. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.30 in profit.
What Is The Relationship Between ROE And Earnings Growth?
We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features.
A Side By Side comparison of ON Semiconductor's Earnings Growth And 30% ROE
Firstly, we acknowledge that ON Semiconductor has a significantly high ROE. Additionally, the company's ROE is higher compared to the industry average of 19% which is quite remarkable. This probably laid the groundwork for ON Semiconductor's moderate 17% net income growth seen over the past five years.
We then compared ON Semiconductor's net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 28% in the same period, which is a bit concerning.
NasdaqGS:ON Past Earnings Growth December 9th 2022The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. This then helps them determine if the stock is placed for a bright or bleak future. Is ON Semiconductor fairly valued compared to other companies? These 3 valuation measures might help you decide.
Is ON Semiconductor Efficiently Re-investing Its Profits?
Given that ON Semiconductor doesn't pay any dividend to its shareholders, we infer that the company has been reinvesting all of its profits to grow its business.
Conclusion
Overall, we are quite pleased with ON Semiconductor's performance. Particularly, we like that the company is reinvesting heavily into its business, and at a high rate of return. As a result, the decent growth in its earnings is not surprising. Having said that, the company's earnings growth is expected to slow down, as forecasted in the current analyst estimates. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
安達半導體(NASDAQ:ON)在股票市場上取得了巨大的運行,與過去一個月相比,其庫存量大幅增加了 7.6%。鑑於市場長期獎勵強勁的財務狀況,我們想知道在這種情況下是否是這種情況。在本文中,我們決定專注於半導體的 ROE。
股東回報率或 ROE 是股東需要考慮的重要因素,因為它可以告訴他們其資本再投資的有效性。簡而言之,它是用來評估公司相對於其股本的盈利能力。
查看我們對安森半導體的最新分析
如何計算權益回報率?
權益回報率可以通過使用以下公式計算:
權益回報率 = 淨利潤(來自持續經營業務)÷ 股東權益
因此,基於上述公式,ON 半導體的 ROE 是:
30% = 1.7 億美元 ÷ 57 億美元(以截至 2022 年 9 月為止的最近十二個月計算)。
「回報」是企業在過去一年賺取的收入。想到這一點的另一種方法是,每 $1 股權,該公司就能賺取 0.30 美元的利潤。
ROE 與盈利增長之間的關係是什麼?
我們已經確定 ROE 可作為公司未來收益的有效創造利潤計量。我們現在需要評估公司重新投資多少利潤或「保留」未來的增長,這使我們對公司的增長潛力有了一個想法。假設其他一切都是平等的,那麼與沒有相同功能的公司相比,具有較高的股權回報率和更高的利潤保留率的公司通常是具有較高增長率的公司。
並排比較安半導體的盈利增長率和 30% ROE
首先,我們承認 ON 半導體具有顯著高的 ROE。此外,與行業平均水平相比,該公司的 ROE 更高,這是相當顯著的 19%。這可能為安森半導體在過去五年中的 17% 淨收入增長奠定了基礎。
然後我們將安森半導體的淨收入增長與行業進行了比較,發現該公司的成長數據低於同期的 28% 的平均行業增長率,這有點令人擔憂。
納斯達克:過去盈利增長 2022 年 12 月 9 日將價值附加到公司的基礎在很大程度上與其盈利增長有關。投資者應嘗試確定收益的預期增長或下降(以何種情況為準)是否定價。然後,這可以幫助他們確定股票是否放置在光明或黯淡的未來。與其他公司相比,ON 半導體是否公平重視?這 3 種估值措施可能會幫助您做出決定。
安森半導體是否有效地再投資利潤?
鑑於安半導體不向股東支付任何股息,因此我們推斷公司一直在重新投資其所有利潤以增長其業務。
结论
總體而言,我們對安半導體的性能感到非常滿意。特別是,我們喜歡該公司正在重新投資於其業務,並以高回報率。其結果是,在其收益體面的增長並不奇怪。話雖如此,該公司的盈利增長預計將放緩,正如當前分析師估計的那樣。這些分析師的期望是基於對行業的廣泛期望,還是基於公司的基本面?點擊此處進入我們的分析師對公司的預測頁面。
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這篇文章由簡單牆聖是一般性質. 我們僅使用公正的方法,根據歷史數據和分析師預測提供評論,我們的文章並不打算作為財務建議。 它並不構成購買或出售任何股票的建議,也不會考慮您的目標或您的財務狀況。我們的目標是為您帶來由基本數據驅動的長期集中分析。請注意,我們的分析可能不會考慮最新的價格敏感公司公告或定性材料。簡易華街在提及的任何股票中都沒有倉位。
譯文內容由第三人軟體翻譯。
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