Does ON Semiconductor (NASDAQ:ON) Deserve A Spot On Your Watchlist?

ON Semiconductor Corporation -5.61%

ON Semiconductor Corporation

ON

66.64

-5.61%

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in ON Semiconductor (NASDAQ:ON). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

Check out our latest analysis for ON Semiconductor

How Fast Is ON Semiconductor Growing Its Earnings Per Share?

Over the last three years, ON Semiconductor has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. As a result, we'll zoom in on growth over the last year, instead. ON Semiconductor's EPS skyrocketed from US$3.98 to US$5.17, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 30%.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. EBIT margins for ON Semiconductor remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 3.4% to US$8.3b. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

earnings-and-revenue-history
NasdaqGS:ON Earnings and Revenue History December 30th 2023

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of ON Semiconductor's forecast profits?

Are ON Semiconductor Insiders Aligned With All Shareholders?

Since ON Semiconductor has a market capitalisation of US$37b, we wouldn't expect insiders to hold a large percentage of shares. But we do take comfort from the fact that they are investors in the company. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$104m. While that is a lot of skin in the game, we note this holding only totals to 0.3% of the business, which is a result of the company being so large. This should still be a great incentive for management to maximise shareholder value.

Should You Add ON Semiconductor To Your Watchlist?

You can't deny that ON Semiconductor has grown its earnings per share at a very impressive rate. That's attractive. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in ON Semiconductor's continuing strength. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. You still need to take note of risks, for example - ON Semiconductor has 1 warning sign we think you should be aware of.

Although ON Semiconductor certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with insider buying, then check out this handpicked selection of companies that not only boast of strong growth but have also seen recent insider buying..

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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