ON
ON Semiconductor Corporation
$75.62
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 30.2% above fair value
You pay
$75.62
Bear
$43.56
Fair
$58.08
Bull
$72.60
Bear
$43.56
-42.4%
$3.63 × 12x
Fair
$58.08
-23.2%
$3.63 × 16x
Bull
$72.60
-4.0%
$3.63 × 20x
Adjust Assumptions
16.0x
3.63$
Key Value Driver
Through-cycle normalized EPS ($3.63)
Implied Market Multiple
20.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (47 analysts)
$100.00
Divergence from AlphaVal
42%
Summary
Using 7-year normalized EPS of $3.63 at a 16x cycle multiple, the base-case value is $58.08 per share. P/TBV cross-check: 5.2x.
Warnings
Price-to-book value of 5.2x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $100.00 (from 47 analysts). Our estimate is 42% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing