Why ON Semiconductor Hit a 15-Year High: Could It Run More?

Technology

Published: February 13, 2017 8:50 am

Last Updated: January 12, 2020 2:54 pm

ON Semiconductor Corp. (NASDAQ: ON) reported its fourth-quarter financial results early on Monday and saw its shares hit a high not seen in over 15 years. The company said that it had $0.32 in earnings per share (EPS) and $1.26 billion in revenue, versus consensus estimates from Thomson Reuters that called for $0.23 in EPS and revenue of $1.22 billion. The same period of last year reportedly had EPS of $0.19 and $840.3 million in revenue.

Part of what helped to push revenue even higher for this quarter was the contribution of roughly $358 million from the acquisition of Fairchild, which closed in September 2016.

The prospects for this company look very strong as it continues to expand in auto, industrial and communications markets. Also synergies from Fairchild the strong execution and cost control are positioning the company to drive meaningful growth and cash flow in the coming years.

In terms of guidance for the first quarter, the company expects to see revenues in the range of $1.215 billion to $1.265 billion with a gross margin of 34% to 36%. The consensus estimates call for $0.23 in EPS and $1.2 billion in revenue for the current quarter.

On the books, ON Semiconductor’s cash and cash equivalents totaled $1.028 billion at the end of the quarter, versus $617.6 million in the same period from last year.

Keith Jackson, president and chief executive of ON Semiconductor, commented:

Our results in the fourth quarter provide clear evidence of our strong execution on the integration of Fairchild, and the results also validate our strategic and financial rationale for the acquisition. We continue to make rapid progress in the integration, and we are currently tracking significantly ahead of schedule in realizing synergies from the combination of Fairchild and ON Semiconductor.

Shares of On Semiconductor closed Friday at $14.14, with a consensus analyst price target of $14.76 and a 52-week trading range of $7.25 to $14.29. Following the release of the earnings report, the stock was up over 8% at $15.30 in early trading indications on Monday.