ON Semiconductor (ON) Stock Up After Pricing Private Offering

NEW YORK (TheStreet) -- Shares of ON Semiconductor (ON) are higher by 2.95% to $13.36 on heavy volume in early afternoon trading on Wednesday, after the company announced the pricing of its previously disclosed private offering of $600 million aggregate principal amount of 1% convertible senior notes due 2020.

ON Semiconductor is a Phoenix, AZ.-based designer, manufacturer, and marketer of a portfolio of semiconductor components used for electronic systems and products.

So far today, 24.29 million shares of ON Semiconductor have exchanged hands as compared to its average daily volume of 5.14 million shares.

The company has granted initial purchasers of the notes a 30-day option to acquire up to an additional $90 million aggregate principal amount.

The offer is expected to close on Monday, June 8.

Separately, TheStreet Ratings team rates ON SEMICONDUCTOR CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ON SEMICONDUCTOR CORP (ON) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 23.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Compared to its closing price of one year ago, ON's share price has jumped by 49.48%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ON should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ON SEMICONDUCTOR CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ON SEMICONDUCTOR CORP increased its bottom line by earning $0.42 versus $0.33 in the prior year. This year, the market expects an improvement in earnings ($0.95 versus $0.42).
  • The debt-to-equity ratio is somewhat low, currently at 0.72, 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 0.90 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has increased to $83.50 million or 11.48% when compared to the same quarter last year. Despite an increase in cash flow, ON SEMICONDUCTOR CORP's average is still marginally south of the industry average growth rate of 20.26%.
  • You can view the full analysis from the report here: ON Ratings Report

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