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What's in Store for ON Semiconductor (ON) this Earnings Season?

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·4 min read
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ON Semiconductor Corporation ON is scheduled to release first-quarter 2021 results on May 3.

For the first quarter, the Zacks Consensus Estimate for earnings is pegged at 34 cents that indicates a surge of 240% year over year.

The consensus estimate for revenues is pegged at $1.46 billion, which suggests an improvement of 14.4% from the year-ago quarter’s reported figure. For first-quarter 2021, ON Semiconductor projects revenues in the range of $1.41-$1.51 billion.

ON Semiconductor Corporation Price and EPS Surprise

ON Semiconductor Corporation Price and EPS Surprise
ON Semiconductor Corporation Price and EPS Surprise

ON Semiconductor Corporation price-eps-surprise | ON Semiconductor Corporation Quote


Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters and missed the same in the remaining quarter. The company has a trailing four-quarter earnings surprise of 133.45%, on average.

Factors Likely to Influence Q1 Results

Stabilizing automotive and industrial sector as well as broad-based macroeconomic recovery are expected to have contributed to ON Semi’s first-quarter performance.

The Zacks Consensus Estimate for revenues for Automotive end markets is pegged at $520 million that suggests year-over-year growth 18.5%.

Solid momentum in image sensors amid consistent growth in advanced driver-assistance systems (“ADAS”) and vehicle electrification domains, driven by uptick in global automotive production are anticipated to have supported the company’s automotive segment in the to-be-reported quarter.

Strong traction for silicon carbide (SiC) and silicon power products along with higher demand for IGBT solutions driven by growth in electric vehicles (EVs) might have acted as a tailwind.

ON Semi is also witnessing healthy demand for its LiDAR solutions along with ultrasonic, lighting, and actuator offerings. This is likely to have positively impacted the top line in the first quarter.

Revenues from Industrial end-market are anticipated to have benefitted from higher demand for the company’s alternative energy applications and power modules as well as momentum seen in the company’s machine vision and factory automation applications including XGS family of image sensors.

The Zacks Consensus Estimate is currently pegged at $360 million for the Industrial/Medical/Mil-Aero end-markets, which suggest an improvement of 14.3% year over year.

Communications end-market revenues are anticipated to have been driven by rapid deployment of 5G. However, weakness in smartphone business might have acted as a headwind. The Zacks Consensus Estimate for revenues is currently pegged at $245 million for the Communications end-markets, indicating a fall of 3.5% year over year.

Continued strength in client and server business is anticipated to have added to the top line in the Computing end-market segment. The Zacks Consensus Estimate for revenues is currently pegged at $183 million for the Computing end-markets, which indicates an increase of 34.6% year over year.

The Zacks Consensus Estimate for Consumer end market revenues is currently pegged at $148 million, which suggests year-over-year growth of 10.4%.

Nonetheless, with second wave of COVID-19 infections gripping several parts of the world, many countries undertook re-imposition of shelter-in-place guidelines. This might have negatively impacted production across automotive vertical.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for ON Semiconductor this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

ON Semiconductor has a Zacks Rank #3 and an Earnings ESP of +6.14%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are other stocks which you may consider as our proven model shows that these also have the right mix of elements to beat estimates this time around:

Citrix Systems CTXS has an Earnings ESP of +0.15% and holds a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Vishay Intertechnology VSH has an Earnings ESP of +5.22% and currently carries a Zacks Rank of 2.

Qorvo QRVO has an Earnings ESP of +2.4% and a Zacks Rank of 2.

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