ON
Semiconductor Stock Report Card
Martin Zweig: ON Semiconductor Report Card
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[PASS]
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[FAIL]
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[PASS]
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[FAIL]
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[PASS]
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[FAIL]
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[FAIL]
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[FAIL]
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[FAIL]
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[FAIL]
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[PASS]
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[FAIL
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Motley Fool Analysis of ON
SEMICONDUCTOR:
PROFIT MARGIN: [FAIL]
This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. The companies that pass this criterion have strong positions within their respective industries and offer greater shareholder returns. A true test of the quality of a company is that they can sustain this margin. ONNN's profit margin of 6.08% fails this test.
RELATIVE STRENGTH: [FAIL]
The investor must look at the relative strength of the company in question. Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been rising much quicker than the market tend to keep rising. Although ONNN's relative strength of 86 is below the acceptable level, yet it is very close. Keep an eye on the stock as it could move into the acceptable range.
COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: [FAIL]
Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for ONNN (-100.00% for EPS, and 20.36% for Sales) are not good enough to pass.
INSIDER HOLDINGS: [FAIL]
ONNN's insiders should own at least 10% (they own 0.64%) of the company's outstanding shares. This does not satisfy the minimum requirement, and companies that do not pass this criteria are less attractive.
CASH FLOW FROM OPERATIONS: [PASS]
A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. ONNN's free cash flow of $0.62 per share passes this test.
PROFIT MARGIN CONSISTENCY: [PASS]
ONNN's profit margin has been consistent or even increasing over the past three years (Current year: 6.00%, Last year: 5.40%, Two years ago: -3.36%), passing the requirement. It is a sign of good management and a healthy and competitive enterprise.
R&D AS A PERCENTAGE OF SALES: [NEUTRAL]
This criterion is not critically important for companies that are not high-tech or medical stocks because they are not as R&D dependant as companies within those sectors. Not much emphasis should be placed on this test in ONNN's case.
CASH AND CASH EQUIVALENTS: [FAIL]
Unfortunately, the data is unavailable for ONNN. Hence, an opinion cannot be rendered.
INVENTORY TO SALES: [PASS]
This methodology strongly believes that companies, especially small ones, should have tight control over inventory. It's a warning sign if a company's inventory relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Inventory to Sales for ONNN was 21.88% last year, while for this year it is 23.08%. Although the inventory to sales is rising, it is below the max 30% that is allowed. The investor can still consider the stock if all other criteria appear very attractive.
ACCOUNT RECEIVABLE TO SALES: [PASS]
This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for ONNN was 14.92% last year, while for this year it is 14.48%. Since the AR to sales is decreasing by -0.43% the stock passes this criterion.
LONG TERM DEBT/EQUITY RATIO: [FAIL]
ONNN's trailing twelve-month Debt/Equity ratio (60.44%) is too high, according to this methodology. You can find other more superior companies that do not have to borrow money in order to grow.
"THE FOOL RATIO" (P/E TO GROWTH): [FAIL]
The "Fool Ratio" is an extremely important aspect of this analysis. Unfortunately, ONNN's "Fool Ratio" is not available due to a lack of one or more important figures. Hence, an opinion cannot be given at this time.
The following criteria for ONNN are less important which means you would place less emphasis on them when making your investment decision using this strategy:
AVERAGE SHARES OUTSTANDING: [PASS]
ONNN has not been significantly increasing the number of shares outstanding within recent years which is a good sign. ONNN currently has 440.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock.
SALES: [FAIL]
Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. ONNN's sales of $3,161.8 million based on trailing 12 month sales, are too high and would therefore fail the test. It is companies with $500 million or less in sales that are most likely to double or triple in size in the next few years.
DAILY DOLLAR VOLUME: [FAIL]
ONNN does not meet the Daily Dollar Volume (DDV of $0.0 million) test. It is required that this number be greater than $1 million and less than $25 million because these are the stocks that are liquid but remain relatively undiscovered by institutions. ONNN is too illiquid to be considered attractive at this time.
PRICE: [FAIL]
This is a very insignificant criterion for this methodology. But basically, low prices are chosen because "small numbers multiply more rapidly than large ones" and the potential for big returns expands. ONNN's price is not currently available. Therefore the current price cannot be evaluated at this time.
INCOME TAX PERCENTAGE: [FAIL]
ONNN's income tax paid expressed as a percentage of pretax income either this year (-0.10%) or last year (9.65%) is below 20% which is cause for concern. Because the tax rate is below 20% this could mean that the earnings that were reported are unrealistically inflated due to the lower level of income tax paid. However, we have utilized a sophisticated formula so that the http://www.nasdaq.com/symbol/onnn/guru-analysis/fool#ixzz3U5SPpVJ6
This methodology seeks companies with a minimum trailing 12 month after tax profit margin of 7%. The companies that pass this criterion have strong positions within their respective industries and offer greater shareholder returns. A true test of the quality of a company is that they can sustain this margin. ONNN's profit margin of 6.08% fails this test.
RELATIVE STRENGTH: [FAIL]
The investor must look at the relative strength of the company in question. Companies whose relative strength is 90 or above (that is, the company outperforms 90% or more of the market for the past year), are considered attractive. Companies whose price has been rising much quicker than the market tend to keep rising. Although ONNN's relative strength of 86 is below the acceptable level, yet it is very close. Keep an eye on the stock as it could move into the acceptable range.
COMPARE SALES AND EPS GROWTH TO THE SAME PERIOD LAST YEAR: [FAIL]
Companies must demonstrate both revenue and net income growth of at least 25% as compared to the prior year. These growth rates give you the dynamic companies that you are looking for. These rates for ONNN (-100.00% for EPS, and 20.36% for Sales) are not good enough to pass.
INSIDER HOLDINGS: [FAIL]
ONNN's insiders should own at least 10% (they own 0.64%) of the company's outstanding shares. This does not satisfy the minimum requirement, and companies that do not pass this criteria are less attractive.
CASH FLOW FROM OPERATIONS: [PASS]
A positive cash flow is typically used for internal expansion, acquisitions, dividend payments, etc. A company that generates rather than consumes cash is in much better shape to fund such activities on their own, rather than needing to borrow funds to do so. ONNN's free cash flow of $0.62 per share passes this test.
PROFIT MARGIN CONSISTENCY: [PASS]
ONNN's profit margin has been consistent or even increasing over the past three years (Current year: 6.00%, Last year: 5.40%, Two years ago: -3.36%), passing the requirement. It is a sign of good management and a healthy and competitive enterprise.
R&D AS A PERCENTAGE OF SALES: [NEUTRAL]
This criterion is not critically important for companies that are not high-tech or medical stocks because they are not as R&D dependant as companies within those sectors. Not much emphasis should be placed on this test in ONNN's case.
CASH AND CASH EQUIVALENTS: [FAIL]
Unfortunately, the data is unavailable for ONNN. Hence, an opinion cannot be rendered.
INVENTORY TO SALES: [PASS]
This methodology strongly believes that companies, especially small ones, should have tight control over inventory. It's a warning sign if a company's inventory relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Inventory to Sales for ONNN was 21.88% last year, while for this year it is 23.08%. Although the inventory to sales is rising, it is below the max 30% that is allowed. The investor can still consider the stock if all other criteria appear very attractive.
ACCOUNT RECEIVABLE TO SALES: [PASS]
This methodology wants to make sure that a company's accounts receivable do not get significantly out of line with sales. It's a warning sign if a company's accounts receivable relative to sales increases significantly when compared to the previous year. Up to a 30% increase is allowed, but no more. Accounts Receivable to Sales for ONNN was 14.92% last year, while for this year it is 14.48%. Since the AR to sales is decreasing by -0.43% the stock passes this criterion.
LONG TERM DEBT/EQUITY RATIO: [FAIL]
ONNN's trailing twelve-month Debt/Equity ratio (60.44%) is too high, according to this methodology. You can find other more superior companies that do not have to borrow money in order to grow.
"THE FOOL RATIO" (P/E TO GROWTH): [FAIL]
The "Fool Ratio" is an extremely important aspect of this analysis. Unfortunately, ONNN's "Fool Ratio" is not available due to a lack of one or more important figures. Hence, an opinion cannot be given at this time.
The following criteria for ONNN are less important which means you would place less emphasis on them when making your investment decision using this strategy:
AVERAGE SHARES OUTSTANDING: [PASS]
ONNN has not been significantly increasing the number of shares outstanding within recent years which is a good sign. ONNN currently has 440.0 million shares outstanding. This means the company is not taking any measures, with regards to the number of shares, that will dilute or devalue the stock.
SALES: [FAIL]
Companies with sales less than $500 million should be chosen. It is among these small-cap stocks that investors can find "an uncut gem", ones that institutions won't be able to buy yet. ONNN's sales of $3,161.8 million based on trailing 12 month sales, are too high and would therefore fail the test. It is companies with $500 million or less in sales that are most likely to double or triple in size in the next few years.
DAILY DOLLAR VOLUME: [FAIL]
ONNN does not meet the Daily Dollar Volume (DDV of $0.0 million) test. It is required that this number be greater than $1 million and less than $25 million because these are the stocks that are liquid but remain relatively undiscovered by institutions. ONNN is too illiquid to be considered attractive at this time.
PRICE: [FAIL]
This is a very insignificant criterion for this methodology. But basically, low prices are chosen because "small numbers multiply more rapidly than large ones" and the potential for big returns expands. ONNN's price is not currently available. Therefore the current price cannot be evaluated at this time.
INCOME TAX PERCENTAGE: [FAIL]
ONNN's income tax paid expressed as a percentage of pretax income either this year (-0.10%) or last year (9.65%) is below 20% which is cause for concern. Because the tax rate is below 20% this could mean that the earnings that were reported are unrealistically inflated due to the lower level of income tax paid. However, we have utilized a sophisticated formula so that the http://www.nasdaq.com/symbol/onnn/guru-analysis/fool#ixzz3U5SPpVJ6
Benjamin
Graham:
SALES: [PASS]
The investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. ONNN's sales of $3,161.8 million, based on trailing 12 month sales, pass this test.
CURRENT RATIO: [FAIL]
The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. ONNN's current ratio of 1.74 fails the test.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]
For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for ONNN is $983.0 million, while the net current assets are $765.0 million. ONNN fails this test.
LONG-TERM EPS GROWTH: [FAIL]
Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for ONNN were negative within the last 5 years and therefore the company fails this criterion.
P/E RATIO: [FAIL]
The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. ONNN's P/E of 29.86 (using the current PE) fails this test.
PRICE/BOOK RATIO: [FAIL]
The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. ONNN's Price/Book ratio is 3.40, while the P/E is 0. ONNN fails the Price/Book tes
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