Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Aggregate Accruals
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Economic Profit
ON Semiconductor Corp., economic profit calculation
US$ in thousands
| 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 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a fluctuating but overall increasing trend from 2019 to 2023. It started at 340,562 thousand US dollars in 2019, decreased to 262,790 thousand in 2020, then rose significantly to 1,214,151 thousand in 2021. This increasing momentum continued with 1,991,931 thousand in 2022 and reached 2,073,654 thousand in 2023. This indicates an overall improvement in operating profitability over the analyzed period with a notable recovery and strong growth after the dip in 2020.
- Cost of Capital
- The cost of capital exhibited an upward trend from 16.52% in 2019 to a peak of 21.17% in 2022, followed by a slight decline to 20.76% in 2023. This suggests a rising cost of financing or increased perceived risk up to 2022, with a modest reduction in 2023.
- Invested Capital
- The invested capital consistently increased over the five-year period. Starting from 6,857,500 thousand US dollars in 2019, it experienced steady growth each year to reach 10,925,400 thousand in 2023. This continuous increase reflects ongoing investments or expansion in the company's asset base.
- Economic Profit
- Economic profit was negative from 2019 through 2021, with the largest deficit occurring in 2020 at -1,057,950 thousand US dollars. In 2022, the company achieved a break-even point with a slight positive economic profit of 7,973 thousand, indicating that operating returns covered the cost of capital. However, in 2023, economic profit turned negative again, reaching -194,797 thousand, implying that despite increased NOPAT, the returns did not fully cover the higher invested capital and cost of capital.
- Summary of trends
- The data reveals a scenario where operating profitability has grown significantly since 2020, accompanied by a sustained increase in invested capital. The rising cost of capital has put pressure on returns, as evidenced by predominantly negative economic profit throughout most of the period. The brief positive economic profit in 2022 was not sustained in 2023, suggesting challenges in generating returns above the increasing capital costs and investments. This pattern may warrant focus on improving capital efficiency or managing capital costs to enhance value creation going forward.
Net Operating Profit after Taxes (NOPAT)
ON Semiconductor Corp., NOPAT calculation
US$ in thousands
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
= × =
5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
8 Elimination of after taxes investment income.
- Net income attributable to ON Semiconductor Corporation
- The net income shows a consistent upward trend over the five-year period. Starting from approximately 211.7 million US dollars in 2019, it increased modestly to 234.2 million in 2020. A significant jump occurred in 2021, with net income more than quadrupling to around 1.009 billion. This strong growth continued through 2022 and 2023, reaching about 1.902 billion and 2.184 billion US dollars respectively, indicating robust profitability improvement and operational performance over time.
- Net operating profit after taxes (NOPAT)
- NOPAT values display some fluctuations initially but then show a marked increase from 2021 onward. In 2019, NOPAT was approximately 340.6 million US dollars but declined to 262.8 million in 2020. Starting 2021, there was a substantial rise to around 1.214 billion US dollars. The upward trajectory continued into 2022 and 2023 with NOPAT reaching roughly 1.992 billion and 2.074 billion US dollars respectively. This pattern suggests improved operational efficiency and effective tax management contributing to growing operating profitability.
Cash Operating Taxes
ON Semiconductor Corp., cash operating taxes calculation
US$ in thousands
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).
The financial data reveals notable fluctuations in both the provision for income taxes and cash operating taxes over the five-year period ending December 31, 2023.
- Provision (benefit) for income taxes
- This item shows significant volatility throughout the periods. In 2019, the provision was a positive value of 62,700 thousand US dollars, indicating income tax expense recognition for that year. In 2020, there was a reversal to a tax benefit of 59,800 thousand US dollars, suggesting the company recognized a tax benefit rather than an expense. Following this, 2021 experienced a sharp increase in tax provision to 146,600 thousand US dollars, more than doubling the 2019 figure. The upward trend continued markedly in 2022, reaching 458,400 thousand US dollars, the highest in the period under review. In 2023, the provision decreased somewhat to 350,200 thousand US dollars, although it remained substantially higher than the values reported in 2019 through 2021.
- Cash operating taxes
- Cash operating taxes demonstrate an overall increasing trend over the five years. Beginning at 79,994 thousand US dollars in 2019, the amount increased modestly to 90,557 thousand US dollars in 2020. In 2021, there was a slight decline to 84,769 thousand US dollars. However, a pronounced upward shift occurred in 2022, with cash operating taxes escalating dramatically to 457,073 thousand US dollars. This elevated level sustained into 2023 with a further slight increase to 470,018 thousand US dollars.
In summary, both the provision for income taxes and cash operating taxes experienced considerable growth from 2021 onwards, with particularly sharp increases in 2022 and 2023. The provision for income taxes fluctuated between an expense and a benefit in the early years but settled into a notably higher expense level in later years. The cash operating taxes overall trend upward, with a pronounced rise starting in 2022, possibly aligning with the increases in the provision for income taxes, indicating higher taxable income or changes in tax positions and payments during those years.
Invested Capital
ON Semiconductor Corp., invested capital calculation (financing approach)
US$ in thousands
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.
- Total Reported Debt & Leases
- The total reported debt and leases showed a decreasing trend from 3,726,500 thousand USD at the end of 2019 to 3,272,400 thousand USD at the end of 2021. However, this downward trend reversed in the subsequent years, increasing to 3,512,400 thousand USD in 2022 and further to 3,623,800 thousand USD in 2023. Overall, the debt levels exhibit a moderate fluctuation with a reduction phase followed by a gradual increase.
- Total ON Semiconductor Corporation Stockholders’ Equity
- Stockholders' equity demonstrated consistent and considerable growth over the five-year period. Starting at 3,301,700 thousand USD in 2019, equity increased steadily each year, reaching 7,782,600 thousand USD by 2023. This reflects strong capital accumulation and possibly retained earnings or equity issuances that enhanced the company's net worth significantly over time.
- Invested Capital
- Invested capital showed a gradual upward trajectory throughout the period. Beginning at 6,857,500 thousand USD in 2019, it remained relatively stable through 2020 but increased notably to 7,560,500 thousand USD in 2021, followed by a sharper rise to 9,371,400 thousand USD in 2022 and 10,925,400 thousand USD in 2023. This trend indicates increasing investment in the company's operational assets, which may support business growth and expansion activities.
Cost of Capital
ON Semiconductor Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Long-term debt and financing lease liabilities, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit experienced significant fluctuations over the analyzed period. There was a marked decline from -792,567 thousand US$ in 2019 to a more negative -1,057,950 thousand US$ in 2020, indicating increased economic losses. However, 2021 saw a substantial improvement with a reduced loss of -315,143 thousand US$. In 2022, the company recorded a slight positive economic profit at 7,973 thousand US$, reflecting a brief recovery. This positive trend was reversed in 2023, with economic profit declining again to -194,797 thousand US$.
- Invested Capital
- Invested capital steadily increased each year, starting from 6,857,500 thousand US$ in 2019 and rising to 10,925,400 thousand US$ in 2023. This consistent growth suggests ongoing investments and asset expansions over the period, with notable acceleration between 2021 and 2023.
- Economic Spread Ratio
- The economic spread ratio remained negative throughout most of the period, indicating that the returns on invested capital did not exceed the cost of capital for the majority of the years. It worsened from -11.56% in 2019 to -15.36% in 2020. However, this ratio improved significantly in 2021, reducing the deficit to -4.17%, and narrowly surpassed zero in 2022 at 0.09%, reflecting a brief positive economic spread. The ratio declined again to -1.78% in 2023, signaling a return to suboptimal returns relative to capital costs.
- Overall financial performance trends
- The data highlight a challenging period with economic losses, particularly severe in 2020, followed by a phase of recovery culminating in a brief positive economic profit and spread in 2022. Despite the increase in invested capital, the company struggled to consistently generate returns above its capital costs, as illustrated by the mostly negative economic spread ratios. The reversion to negative economic profit and spread in 2023 suggests difficulties in sustaining profitability amid growing capital investment.
Economic Profit Margin
ON Semiconductor Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
- Revenue Trend
- Revenue increased steadily from 5,517,900 thousand US dollars in 2019 to a peak of 8,326,200 thousand US dollars in 2022, before a slight decline to 8,253,000 thousand US dollars in 2023. This indicates a generally positive growth trajectory over the five-year period, with 2023 showing a minor decrease compared to the previous year.
- Economic Profit
- Economic profit remained negative from 2019 to 2021, starting at -792,567 thousand US dollars and deteriorating further to -1,057,950 thousand US dollars in 2020, before improving to -315,143 thousand US dollars in 2021. In 2022, the company reported a small positive economic profit of 7,973 thousand US dollars, signaling improved operational efficiency or profitability. However, in 2023, economic profit turned negative again, reaching -194,797 thousand US dollars, indicating a setback in value creation.
- Economic Profit Margin
- The economic profit margin followed a similar pattern to economic profit, starting at -14.36% in 2019 and declining to -20.13% in 2020. There was a marked improvement in 2021 with the margin improving to -4.68%, followed by a marginally positive margin of 0.1% in 2022. Despite this improvement, the margin fell back to -2.36% in 2023, consistent with the negative economic profit figure for that year.
- Summary of Insights
- Overall, the company experienced consistent revenue growth from 2019 through 2022, suggesting expanding business operations or market share. However, despite revenue growth, economic profit was negative for most of the period, indicating challenges in generating value over cost of capital. The brief attainment of a positive economic profit in 2022 represents a notable improvement in financial performance. The reversal to negative economic profit in 2023, despite high revenue levels, signals potential issues with cost management, increased expenses, or other factors affecting profitability. Continuous monitoring of these profitability measures, alongside revenue trends, will be important for assessing long-term financial health.