2024-06-02 22:26:42 ET
Summary
- ON Semiconductor leads in silicon carbide and analog/mixed-signal platforms, supporting autonomous driving. Major competitors include Infineon and Texas Instruments; I consider Infineon the best investment.
- ON's growth is competitive with Texas Instruments but slightly lags behind Infineon. The semiconductor industry is capital-intensive, leading to periods of weak free cash flow. Infineon has higher growth rates.
- ON is cheap compared to peers based on P/E GAAP ratios and performs well in my 20-year discounted earnings model. However, the DCF model shows a less promising valuation.
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ON Semiconductor Is Fairly Valued Despite High Capital Intensity Challenges