Semiconductor ON

First things I check are monthly chart, Forward P/E and PEG.
It definitely passed those tests so then I ask Gemini for more info.

It’s a classic case of the stock market looking through the windshield while the rearview mirror is still covered in mud. You’ve caught ON Semiconductor (onsemi) at a fascinating cyclical crossroads.

Here is the breakdown of why those numbers look so contradictory right now.

1. The Rearview Mirror: Why Revenue is Declining
The declines you’re seeing in revenue and net income are real, but they are largely cyclical, not structural.
* The Automotive Hangover: After the post-pandemic chip shortage, car manufacturers over-ordered. In 2024 and 2025, the industry entered a period of inventory correction—basically, customers stopped buying new chips because they were busy using up the ones already sitting in their warehouses.
* EV Growing Pains: onsemi is heavily levered to Electric Vehicles (EVs). As the global growth rate for EVs slowed slightly in 2025, onsemi’s top line took a direct hit.
* The Bottom-Line Blip: You might have noticed a massive dip in 2025 net income (dropping over 90% year-over-year). This was heavily impacted by one-time charges and the trough of this cycle, which makes the trailing P/E look astronomical while the company is actually still quite healthy.

2. The Windshield: Why the Forward P/E and PEG are Great
The market isn't buying onsemi for what it did last year; it’s buying it for the 2026/2027 recovery.
* Earnings Bounce-Back: Analysts expect earnings to jump from roughly $2.60 this year to over $3.68 next year (a 40%+ increase). When you divide the current price by that much higher future number, the P/E drops into steal territory.
* The SiC Factor: onsemi is a leader in Silicon Carbide (SiC)—the tech that makes EVs charge faster and drive further. The SiC market is projected to grow at a nearly 20% CAGR through 2030.
* The PEG Secret: Because analysts are forecasting a massive growth spurt as the inventory correction ends, the Price/Earnings-to-Growth (PEG) ratio falls below 1.0. Traditionally, a PEG under 1.0 suggests a stock is undervalued relative to its growth potential.

3. Value Play or Value Trap?
The discrepancy exists because the stock is currently priced for a V-shaped recovery.
Those who see a value trap argue that revenue is shrinking because the EV hype is over and margins are collapsing. Those who see a value play argue that this is a cyclical trough, demand is stabilizing, and current margins are only suppressed by temporary inventory issues. The low forward P/E is either based on overly optimistic analyst hopium or it reflects the massive scale-up of SiC production.

The Verdict
You aren't seeing a broken company; you're seeing a cyclical leader in a temporary downturn. The low Forward P/E and PEG suggest that if the automotive and industrial markets recover as expected in late 2026, the stock is significantly on sale right now.
However, the risk is simple: if the EV transition stalls further or a broader recession hits the industrial sector, those forward earnings estimates will be revised downward, and that great P/E will vanish into thin air.

quote:

---

Up $6.50 today

---

I saw! Unfortunately, I'm spread too thin already.