Results: ON Semiconductor Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
ON Semiconductor Corporation (NASDAQ:ON) just released its latest third-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.3% to hit US$1.3b. ON Semiconductor also reported a statutory profit of US$0.38, which was an impressive 263% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Check out our latest analysis for ON Semiconductor
After the latest results, the 25 analysts covering ON Semiconductor are now predicting revenues of US$5.67b in 2021. If met, this would reflect a solid 8.8% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 101% to US$0.99. Before this earnings report, the analysts had been forecasting revenues of US$5.51b and earnings per share (EPS) of US$0.92 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
With these upgrades, we're not surprised to see that the analysts have lifted their price target 5.0% to US$27.02per share. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic ON Semiconductor analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$17.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the ON Semiconductor's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of ON Semiconductor'shistorical trends, as next year's 8.8% revenue growth is roughly in line with 9.9% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.7% next year. It's clear that while ON Semiconductor's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around ON Semiconductor's earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that ON Semiconductor will grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for ON Semiconductor going out to 2022, and you can see them free on our platform here.
It is also worth noting that we have found 4 warning signs for ON Semiconductor (1 is a bit concerning!) that you need to take into consideration.
This article by Simply Wall St is general in nature. 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.
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