Stock Analysis on Net

ON Semiconductor Corp. (NASDAQ:ON)

Economic Value Added (EVA)

Microsoft Excel

Economic Profit

ON Semiconductor Corp., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net operating profit after taxes (NOPAT)1 2,073,654 1,991,931 1,214,151 262,790 340,562
Cost of capital2 18.99% 19.38% 18.51% 17.56% 15.19%
Invested capital3 10,925,400 9,371,400 7,560,500 6,889,500 6,857,500
 
Economic profit4 (1,404) 176,006 (185,303) (946,676) (701,076)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,073,65418.99% × 10,925,400 = -1,404

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. ON Semiconductor Corp. economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Net Operating Profit after Taxes (NOPAT)

ON Semiconductor Corp., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net income attributable to ON Semiconductor Corporation 2,183,700 1,902,200 1,009,600 234,200 211,700
Deferred income tax expense (benefit)1 (121,000) 20,900 90,500 (114,500) 13,000
Increase (decrease) in accrued restructuring charges2 13,500 (6,400) 4,600 6,000 (300)
Increase (decrease) in equity equivalents3 (107,500) 14,500 95,100 (108,500) 12,700
Interest expense 74,800 94,900 130,400 168,400 148,300
Interest expense, operating lease liability4 12,672 13,803 7,521 7,247 6,156
Adjusted interest expense 87,472 108,703 137,921 175,647 154,456
Tax benefit of interest expense5 (18,369) (22,828) (28,963) (36,886) (32,436)
Adjusted interest expense, after taxes6 69,103 85,876 108,957 138,761 122,020
Interest income (93,100) (15,500) (1,400) (4,900) (10,200)
Investment income, before taxes (93,100) (15,500) (1,400) (4,900) (10,200)
Tax expense (benefit) of investment income7 19,551 3,255 294 1,029 2,142
Investment income, after taxes8 (73,549) (12,245) (1,106) (3,871) (8,058)
Net income (loss) attributable to noncontrolling interest 1,900 1,600 1,600 2,200 2,200
Net operating profit after taxes (NOPAT) 2,073,654 1,991,931 1,214,151 262,790 340,562

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in accrued restructuring charges.

3 Addition of increase (decrease) in equity equivalents to net income attributable to ON Semiconductor Corporation.

4 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 264,000 × 4.80% = 12,672

5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 87,472 × 21.00% = 18,369

6 Addition of after taxes interest expense to net income attributable to ON Semiconductor Corporation.

7 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 93,100 × 21.00% = 19,551

8 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. ON Semiconductor Corp. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

Cash Operating Taxes

ON Semiconductor Corp., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Provision (benefit) for income taxes 350,200 458,400 146,600 (59,800) 62,700
Less: Deferred income tax expense (benefit) (121,000) 20,900 90,500 (114,500) 13,000
Add: Tax savings from interest expense 18,369 22,828 28,963 36,886 32,436
Less: Tax imposed on investment income 19,551 3,255 294 1,029 2,142
Cash operating taxes 470,018 457,073 84,769 90,557 79,994

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. ON Semiconductor Corp. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Invested Capital

ON Semiconductor Corp., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current portion of financing lease liabilities 800 14,200 12,700
Current portion of long-term debt 794,000 147,800 160,700 531,600 736,000
Long-term debt, excluding current portion 2,542,600 3,045,700 2,913,900 2,959,700 2,876,500
Long-term financing lease liabilities 22,400 23,000 10,200
Operating lease liability1 264,000 281,700 174,900 147,900 114,000
Total reported debt & leases 3,623,800 3,512,400 3,272,400 3,639,200 3,726,500
Total ON Semiconductor Corporation stockholders’ equity 7,782,600 6,188,500 4,585,400 3,538,500 3,301,700
Net deferred tax (assets) liabilities2 (562,100) (342,600) (323,100) (371,600) (247,600)
Accrued restructuring charges3 17,900 4,400 10,800 6,200 200
Equity equivalents4 (544,200) (338,200) (312,300) (365,400) (247,400)
Accumulated other comprehensive (income) loss, net of tax5 45,200 23,200 40,600 57,600 54,300
Non-controlling interest 18,000 18,500 19,000 19,600 22,400
Adjusted total ON Semiconductor Corporation stockholders’ equity 7,301,600 5,892,000 4,332,700 3,250,300 3,131,000
Marketable securities, classified as available-for-sale6 (33,000) (44,600)
Invested capital 10,925,400 9,371,400 7,560,500 6,889,500 6,857,500

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of accrued restructuring charges.

4 Addition of equity equivalents to total ON Semiconductor Corporation stockholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of marketable securities, classified as available-for-sale.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. ON Semiconductor Corp. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Cost of Capital

ON Semiconductor Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 33,156,430 33,156,430 ÷ 37,417,230 = 0.89 0.89 × 21.15% = 18.74%
Long-term debt and financing lease liabilities, including current portion3 3,996,800 3,996,800 ÷ 37,417,230 = 0.11 0.11 × 2.71% × (1 – 21.00%) = 0.23%
Operating lease liability4 264,000 264,000 ÷ 37,417,230 = 0.01 0.01 × 4.80% × (1 – 21.00%) = 0.03%
Total: 37,417,230 1.00 18.99%

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and financing lease liabilities, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 34,730,220 34,730,220 ÷ 38,692,220 = 0.90 0.90 × 21.15% = 18.98%
Long-term debt and financing lease liabilities, including current portion3 3,680,300 3,680,300 ÷ 38,692,220 = 0.10 0.10 × 4.91% × (1 – 21.00%) = 0.37%
Operating lease liability4 281,700 281,700 ÷ 38,692,220 = 0.01 0.01 × 4.90% × (1 – 21.00%) = 0.03%
Total: 38,692,220 1.00 19.38%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and financing lease liabilities, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 25,370,322 25,370,322 ÷ 29,510,322 = 0.86 0.86 × 21.15% = 18.18%
Long-term debt and financing lease liabilities, including current portion3 3,965,100 3,965,100 ÷ 29,510,322 = 0.13 0.13 × 2.93% × (1 – 21.00%) = 0.31%
Operating lease liability4 174,900 174,900 ÷ 29,510,322 = 0.01 0.01 × 4.30% × (1 – 21.00%) = 0.02%
Total: 29,510,322 1.00 18.51%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and financing lease liabilities, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 17,237,223 17,237,223 ÷ 21,319,023 = 0.81 0.81 × 21.15% = 17.10%
Long-term debt and financing lease liabilities, including current portion3 3,933,900 3,933,900 ÷ 21,319,023 = 0.18 0.18 × 2.96% × (1 – 21.00%) = 0.43%
Operating lease liability4 147,900 147,900 ÷ 21,319,023 = 0.01 0.01 × 4.90% × (1 – 21.00%) = 0.03%
Total: 21,319,023 1.00 17.56%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and financing lease liabilities, including current portion. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 8,591,272 8,591,272 ÷ 12,863,272 = 0.67 0.67 × 21.15% = 14.12%
Long-term debt and financing lease liabilities, including current portion3 4,158,000 4,158,000 ÷ 12,863,272 = 0.32 0.32 × 4.03% × (1 – 21.00%) = 1.03%
Operating lease liability4 114,000 114,000 ÷ 12,863,272 = 0.01 0.01 × 5.40% × (1 – 21.00%) = 0.04%
Total: 12,863,272 1.00 15.19%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt and financing lease liabilities, including current portion. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

ON Semiconductor Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 (1,404) 176,006 (185,303) (946,676) (701,076)
Invested capital2 10,925,400 9,371,400 7,560,500 6,889,500 6,857,500
Performance Ratio
Economic spread ratio3 -0.01% 1.88% -2.45% -13.74% -10.22%
Benchmarks
Economic Spread Ratio, Competitors4
Advanced Micro Devices Inc. -19.62% -19.34% 37.39% 11.13% -6.99%
Analog Devices Inc. -7.01% -8.37% -11.64% -6.69% -5.15%
Applied Materials Inc. 18.70% 28.57% 24.10% 12.28% 11.91%
Broadcom Inc. 9.51% 7.94% -1.43% -6.98% -6.68%
Intel Corp. -13.34% -6.91% 10.28% 15.94% 14.03%
KLA Corp. 24.99% 27.24% 15.90% 4.76% 6.25%
Lam Research Corp. 11.23% 25.85% 25.31% 8.33% 4.88%
Micron Technology Inc. -25.70% 2.13% -2.40% -8.00% 2.18%
NVIDIA Corp. -9.35% 32.85% 13.28% -0.72% 59.88%
Qualcomm Inc. 3.54% 29.98% 27.39% 12.42% 13.82%
Texas Instruments Inc. 15.63% 36.30% 34.91% 30.07% 29.74%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,404 ÷ 10,925,400 = -0.01%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. ON Semiconductor Corp. economic spread ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

Economic Profit Margin

ON Semiconductor Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit1 (1,404) 176,006 (185,303) (946,676) (701,076)
Revenue 8,253,000 8,326,200 6,739,800 5,255,000 5,517,900
Performance Ratio
Economic profit margin2 -0.02% 2.11% -2.75% -18.01% -12.71%
Benchmarks
Economic Profit Margin, Competitors3
Advanced Micro Devices Inc. -50.08% -47.95% 14.09% 4.98% -3.54%
Analog Devices Inc. -25.16% -31.35% -74.76% -21.74% -15.78%
Applied Materials Inc. 12.54% 16.50% 15.38% 9.34% 8.26%
Broadcom Inc. 16.64% 14.86% -3.38% -19.27% -17.74%
Intel Corp. -22.66% -9.72% 11.51% 16.78% 15.71%
KLA Corp. 19.85% 23.03% 15.67% 5.33% 8.73%
Lam Research Corp. 9.78% 18.75% 18.07% 8.15% 4.26%
Micron Technology Inc. -88.43% 3.65% -4.02% -15.78% 3.61%
NVIDIA Corp. -7.40% 22.02% 10.38% -0.93% 24.45%
Qualcomm Inc. 3.11% 19.97% 16.49% 9.38% 12.21%
Texas Instruments Inc. 20.16% 31.83% 31.23% 26.95% 24.93%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Economic profit. See details »

2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -1,404 ÷ 8,253,000 = -0.02%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. ON Semiconductor Corp. economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.