ON Semiconductor (ON) Is Today's Dead Cat Bounce Stock - TheStreet

Trade-Ideas LLC identified

ON Semiconductor

(

ON

) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified ON Semiconductor as such a stock due to the following factors:

  • ON has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.5 million.
  • ON has traded 254,261 shares today.
  • ON is up 8.6% today.
  • ON was down 6.8% yesterday.

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More details on ON:

ON Semiconductor Corporation manufactures and sells semiconductor components for various electronic devices worldwide. It operates in four segments: Application Products Group, Image Sensor Group, Standard Products Group, and System Solutions Group. ON has a PE ratio of 33. Currently there are 9 analysts that rate ON Semiconductor a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for ON Semiconductor has been 5.1 million shares per day over the past 30 days. ON Semiconductor has a market cap of $4.5 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.78 and a short float of 3.3% with 2.67 days to cover. Shares are up 8.9% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates ON Semiconductor as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 13.4%. Since the same quarter one year prior, revenues rose by 16.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.86, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment industry. The net income has significantly decreased by 46.1% when compared to the same quarter one year ago, falling from $94.10 million to $50.70 million.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, ON SEMICONDUCTOR CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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