Stick with ON Semiconductor Corporation (ON) for the Long Term

The ON Semiconductor Corporation (NASDAQ:ON) bears won the day, but the reality is that the -0.2 points or -1.08 percent decline gave very little definitive technical indication of where the stock could be headed next. On 06 December, the shares traded at $18.27 with a light trade volume of 5.901 million shares. After opening the session at $17.94, the shares went as high as $18.33 and as low as $17.77, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $7.77 billion and now has 425.5 million shares outstanding. ON Semiconductor Corporation (ON) stock has gained 3.1 percent of market value in 21 trading days.

ON stock has a trailing 3-year beta of 2.02, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.23 a share in the trailing twelve months. The stock’s value has fallen -12.75 percent year to date (YTD) against a decline of -4.65 percent in 12 month’s time. The company’s shares still trade -32.58 percent away from its 1-year high of $27.10 and 25.57 percent up from 52-week low of $14.55. The average consensus rating on the company is 2.3, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

ON Semiconductor Corporation (ON) will probably climb 21.13 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $29-month high price target. This represents a whopping 58.73 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $22, which represents a return potential of 20.42 percent when compared to the closing price of the stock of $18.27 on Thursday, December 06. The lowest price target for the stock is $14.5 — slightly more than -20.63 percent from ON’s current share price.

History has shown that shares in ON Semiconductor Corporation have gone down on 4 different earnings reaction days and are predicted to add 0.05 percent when the company reports upcoming earnings. Investors will get their next glimpse of ON’s Q4 earnings on February 07. Analysts are forecasting revenue to climb 9.2 percent to $1.5B in the fiscal fourth quarter, while earnings are seen soaring by nearly 23.08 percent to $0.48 per share. It earned $0.57 per share, better than the $0.51, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $1.54B, better than the $1.51B analysts expected. Earnings are estimated to increase by 94.3 percent this year, 0.21 percent next year and continue to increase by 12.79 percent annually for the next 5 years.

Let’s take a look at some insider activity at ON Semiconductor Corporation (NASDAQ:ON) and see the pattern. The earliest insider trade took place on 12/03/2018. Rolls Paul E parted with a total of 31.49 thousand shares of company at average share price of $20. The total for the sales was set at $629.74 thousand. After this transaction, the Exec VP Sales & Marketing account balance stood at 310.3 thousand shares. The stock lost -8.65 percent since that insider sale. On 11/20/2018, Ostrander Daryl, Director, sold 4 thousand shares at a price per share of $18.01. This removed 72.04 thousand shares from the insider’s fortune and the stock saw a 1.44 percent rally in value since the news became public. This transaction left 85.14 thousand shares in the Director account.

On 11/15/2018, EVP & GM, Pwr Sol Grp Hall William performed a sale transaction worth $284.8 thousand. This sale at $17.73 each has eliminated 16.06 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded 3.05 percent increase since the transaction was reported. The insider now is left with 400.02 thousand shares remaining in the account. Hall William, who performs the EVP & GM, Pwr Sol Grp job, sold 25 thousand shares for $489 thousand. The disposal occurred on 09/17/2018 was priced at $19.56 per share. The share price plunged -6.6 percent since the reporting date. Hall William now left with a stake of 415.8 thousand ON stock worth $7.6 million after the insider selling.

The stock is currently hovering around the first support level of $17.92. Below this, the next support is placed in the zone of $17.56. Till the time, the ON stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 50.91 on daily chart, which may remain a cause for concern. If the price breaks below $17.56 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $18.48 mark may result into a pull-back move towards $18.68 level.

Shares of ON Semiconductor Corporation (ON) are trading at a P/E ratio of 27.96 times earnings reported for the past 12 months. The industry ON operates in has an average P/E of 14.53. Its P/E ratio went as low as 20.33X and as high as 29.43 over the 5-year span.Further, it is sporting a 1.35 on the Price-to-Sales ratio. Compare this with the industry average P/S of 11.59. 38 percent is the gross profit margin for ON Semiconductor Corporation and operating margin sits at 13.5 percent. Along with this, the net profit margin is 17.2 percent.