ON Semiconductor Corp. (NASDAQ:ON)

The analysis of the quarterly financial ratios reveals noticeable trends in the company's performance over the examined periods.

Return on Assets (ROA)

The Return on Assets shows a generally increasing trend from April 2020 to March 2024. Starting at a low positive 0.89% with a brief dip into negative territory (-0.21%) in the second quarter of 2020, ROA steadily rises with minor fluctuations to reach above 16% by the first quarter of 2024. This indicates an improvement in asset utilization efficiency over time, demonstrating enhanced profitability from the company’s asset base.

Financial Leverage

Financial leverage ratios display a consistent downward trend across the periods. Beginning near 2.93, the ratio declines steadily to 1.66 by March 2024. This reduction suggests that the company is gradually decreasing its reliance on debt financing relative to equity, possibly indicating a strengthening balance sheet with lower financial risk and a conservative approach to leveraging operations.

Return on Equity (ROE)

Return on Equity exhibits significant growth, starting from a negative value (-0.61%) in mid-2020 and progressing to nearly 27% by the first quarter of 2024. The upward trajectory is strong and consistent, peaking slightly over 31% during 2022. The increase in ROE, alongside declining financial leverage, implies that the company is efficiently generating profits from its shareholders’ equity, reflecting improved operational performance without increased financial risk.

Overall, the company demonstrates solid financial improvements characterized by increased profitability metrics and reduced financial leverage. The rising ROA and ROE coupled with decreasing financial leverage indicate effective management of assets and equity financing, which could be seen as positive signals of financial health and operational efficiency over the analyzed timeframe.

Net Profit Margin

The net profit margin shows a generally increasing trend over the observed periods. Starting near break-even or slightly negative in early 2020, it rises significantly through 2021 and into 2022, peaking above 26% in late 2023 and early 2024. This indicates improving profitability and operational efficiency, with the margin stabilizing at a high level in the most recent quarters.

Asset Turnover

Asset turnover exhibits a modest upward trend through 2020 and the first half of 2021, increasing from approximately 0.55 to around 0.73. However, after this peak, it gradually declines from late 2021 through early 2024, settling closer to 0.60. This pattern implies the company initially improved its efficiency in generating revenue from assets, but this efficiency diminished somewhat in more recent periods.

Financial Leverage

Financial leverage steadily decreases across the entire timeline, moving from about 2.93 to 1.66. This suggests a consistent reduction in the use of debt or liabilities relative to equity, potentially reflecting a strategy to lower financial risk or improve balance sheet strength over time.

Return on Equity (ROE)

ROE shows a strong upward trend from slightly negative values in early 2020 to a peak above 31% in mid-2022. Following this peak, it experiences a slight decline but remains robust, around 27% by early 2024. The pattern indicates enhanced profitability relative to shareholders’ equity, supported by rising net margins and declining financial leverage despite some decrease in asset turnover in recent periods.

The financial performance over the analyzed periods demonstrates several notable trends across key metrics related to profitability, efficiency, and leverage.

Tax Burden

The tax burden ratio shows periodic fluctuations but remains generally around 0.8 to 0.9 in the later periods. Early volatility is observed with a peak at 1.47 and 1.34 during 2020, followed by a decline stabilizing slightly below 1 from mid-2021 onward. This indicates a gradual normalization of tax impact on net income over time.

Interest Burden

The interest burden ratio exhibits a substantial improvement. Initially, it was low and even negative at one point (-0.18 in mid-2020), which suggests significant interest expense impacting earnings negatively. However, from late 2020 forward, this ratio steadily increases, approaching near 1.0 by early 2024, indicating a reduction of interest expense burden and improving operating income retention before taxes.

EBIT Margin

The EBIT margin shows a strong positive trend. Starting at a low 4.79% in early 2020, there is consistent growth with some minor fluctuations, reaching over 31% by early 2024. This marks a substantial enhancement in operating profitability, reflecting effective cost management and higher operational efficiency.

Asset Turnover

Asset turnover initially experiences a slight increase from 0.57 in early 2020 to a peak of 0.73 around late 2022. Subsequently, it shows a mild decline to 0.60 by early 2024. This suggests initial improvements in the efficient use of assets to generate revenue, followed by a modest reduction in efficiency in the later periods.

Financial Leverage

Financial leverage decreases steadily across the periods, from 2.93 in early 2020 down to 1.66 by early 2024. This indicates a notable reduction in reliance on debt financing, suggesting a strengthening of the company's equity base or repayments of liabilities, which in turn may reduce financial risk.

Return on Equity (ROE)

ROE follows a significant upward trajectory overall. From a negative level (-0.61%) in mid-2020, ROE climbs strongly to a peak around 31.94% by mid-2022, reflecting improved profitability and capital efficiency. Thereafter, it slightly moderates but remains robust near 27% by early 2024, showing sustained ability to generate returns for shareholders despite reduced leverage.

In summary, the data indicate a period of financial strengthening characterized by increased operational profitability, reduced interest burden, improved tax efficiency, and a deliberate lowering of financial leverage while maintaining strong asset utilization and high returns on equity. These trends suggest effective strategic and financial management contributing to enhanced shareholder value over time.

The financial analysis for the periods presented reveals several noteworthy trends in profitability and operational efficiency metrics. The data spans from the first quarter of 2020 through the first quarter of 2024, providing a comprehensive view over multiple years.

Net Profit Margin

This indicator demonstrates a consistent upward trajectory over the duration observed. Initially, it fluctuated around low single digits and occasionally dipped into negative territory early in 2020, indicating some initial operational challenges. However, from 2021 onward, there is a clear and steady increase, reaching above 26% by early 2024. This improvement suggests enhanced profitability and potentially better cost management or pricing power.

Asset Turnover

The asset turnover ratio, reflecting how efficiently the company utilizes its assets to generate sales, exhibits a moderate range of variation. It started slightly below 0.6 and experienced a gradual rise up to approximately 0.73 during late 2022, showing improved asset utilization. From that point forward, however, there is a slight downward trend, declining to about 0.6 by the first quarter of 2024. This recent decrease may point to either an expansion in asset base outpacing sales growth or a shift in operational dynamics reducing efficiency.

Return on Assets (ROA)

The ROA metric, which combines profitability and asset use efficiency, aligns closely with patterns seen in net profit margin and asset turnover. Initially negative or low, it climbed steadily from early 2020 through 2022, peaking near 16-17% in the latest periods. The growth in ROA indicates a stronger overall capacity to generate profits from total assets, corroborating the rising net profit margins despite a slight decline in asset turnover in recent quarters.

Overall, the data points to a solid improvement in profitability metrics alongside fluctuating but generally stable asset efficiency. The company has markedly increased its profitability margins and returns on assets over the examined timeframe. The recent mild reduction in asset turnover to pre-2020 levels warrants attention to asset management practices, but it has not yet negatively impacted the overall returns, which remain robust.

The financial data demonstrates several clear trends and shifts in key profitability and efficiency ratios over the observed periods.

Tax Burden

The tax burden ratio experienced some fluctuations initially, with a peak around October 2020 at 1.47, followed by a decreasing trend through 2021 and stabilizing below 1.0 in late 2022 to early 2024. This suggests a reduction in effective tax rate impact on profits, reflecting possibly improved tax efficiency or changes in tax policy.

Interest Burden

The interest burden ratio showed a significant increase from negative territory in April 2020 (-0.18) to steadily climbing values reaching 0.98 by March 2024. This upward trend indicates a substantial improvement in the company’s ability to cover interest expenses, implying reduced interest expense relative to earnings before interest and taxes (EBIT) or improved operational performance that offsets interest costs.

EBIT Margin

EBIT margins rose significantly over the observed timeframe, from 4.79% in April 2020 to a peak of 33.26% in September 2023, with slight moderation afterwards but remaining above 30%. The margin growth reflects enhanced operational profitability, likely driven by better cost management, higher pricing power, or favorable product mix.

Asset Turnover

Asset turnover ratio remained relatively stable with minor fluctuations, mostly oscillating between 0.55 and 0.73. The ratio showed a slight decline towards the most recent periods, reaching 0.60 by March 2024. This indicates a relatively consistent efficiency in generating sales from assets, though with a modest decreasing trend in the latest quarters, which could suggest slower asset utilization or growth in asset base without proportional sales increases.

Return on Assets (ROA)

ROA steadily improved from a negative or near zero starting point in early 2020 to consistently higher levels above 14% from 2022 onwards, peaking around 16.76% in September 2023. This upward trajectory reflects stronger overall profitability relative to the asset base, underpinned by improved margins and operational efficiency despite the slight decrease in asset turnover in more recent periods.

In summary, the company exhibits clear improvements in profitability and interest coverage over time, with EBIT margins and ROA showing particularly strong positive trends. The asset turnover remains generally stable but exhibits a minor decline recently, which could warrant monitoring to ensure ongoing efficient asset management. The tax burden has normalized at a lower impact level, which may benefit net profitability. Overall, the data signals enhanced financial health and operational performance across the analyzed periods.

The analysis of the company's quarterly financial ratios reveals several notable trends over the observed periods.

Tax Burden

The tax burden ratio has generally remained stable with minimal fluctuations. Starting at 0.84, it experienced a peak above 1.4 in late 2020 before declining back to a range near 0.80 to 0.86 in subsequent quarters. This stability suggests consistent tax expenses relative to pre-tax earnings over time.

Interest Burden

The interest burden ratio showed significant improvement from a negative value early in 2020 (-0.18) to nearly 1.00 by early 2024. This indicates a reduction in interest expenses or improved earnings before interest and taxes, reflecting enhanced company efficiency in managing financing costs.

EBIT Margin

The EBIT margin exhibited a strong upward trajectory, rising from a modest 4.79% in early 2020 to peak above 33% by late 2023. Although there were minor fluctuations, the overall trend demonstrates increasing operational profitability and effective cost management, leading to greater earnings before interest and taxes relative to revenue.

Net Profit Margin

The net profit margin also improved markedly, starting at 1.55% and turning negative briefly in mid-2020, before advancing steadily to about 26.67% by the first quarter of 2024. This growth corroborates the improving profitability seen in EBIT margins and suggests enhanced overall cost control and revenue quality, resulting in higher net income per unit of sales.

Overall, the data indicates significant financial strengthening with improving profitability and better management of interest costs. The stability in tax burden further supports a predictable tax expense relative to earnings. These trends suggest the company has enhanced its operational and financial efficiency over the analyzed period.