ON Semiconductor Corporation (ON) stock prices were down by 3.67% as of the market closing on May 3rd, 2021, bringing the price per share down to USD$37.57 at the end of the trading day. Subsequent pre-market fluctuations saw the price swing upwards by 2.02%, bringing the stock price up to USD$38.33.
Promising Financial Report
In the company’s financial reports for the first quarter of 2021, ON disclosed quarterly revenue of USD1,481.7 million, representing a 16% year-over-year increase. GAAP diluted earnings per share came out to USD$0.20 for Q1 2021, while the same quarter of the previous year reported a GAAP loss per diluted share was USD$0.03. Non-GAAP diluted earnings per share for Q1 2021 were USD$0.035, whereas they were USD$0.10 for Q1 2020.
Impressive Gross Margins
Both GAAP and non-GAAP gross margins for the first quarter of the fiscal year 2021 were reported at 35.2%. This is an 80 basis point increase quarter-over-quarter and a year-over-year improvement of 370 basis points. Such substantial improvements in gross margins are reflective of the company’s continued effort to make its cost structure leaner and more efficient.
Solid Liquidity Position
Cash generated from operating activities was USD$218.5 million in Q1 2021, up from the USD$166 million reported in the same time period of the previous year. As impressive an improvement was the bumping up of free cash flow from UDS$33.7 in Q1 2020 to USD$141.5 million in Q1 2021. Automotive revenue was up by a seemingly meagre 5% quarter-over-quarter but saw the company report a record of USD$515 million.
Forecast of Continued Success?
The company delivered promising results as a consequence of their continued disciplined execution of strategies focused on end-markets in an environment of surging demand. The gross margin improvements are particularly appealing to investors, with the company assuring them of ON’scommitment to further expand the margins. The company’s confidence comes from their recent financial track record as well as the continuation of structural changes to the business being implemented.
Consolidation of EV Footprint
ON was pleased to report the acceleration of the momentum gained in the company’s strategic automotive and industrial end-markets. In February of 2021, ON announced its new range of silicon carbide (SiC) MOSFET devices designed for heavy-duty applications. The company also announced the securing of a key platform design win for its silicon-based power products. Together, these developments serve to further consolidate ON’s market leadership in vehicle electrification.
Future Outlook for ON
With such stellar improvements across the financial board, ON is set to leverage the resources at its disposal to continue its expansive growth. With additions to its product portfolio and its foray into the burgeoning electric vehicle market, current and potential investors are hopeful for significant and sustained increases in shareholder value.
