Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
ON Semiconductor Corp., profitability ratios
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).
Profitability metrics demonstrate a significant upward trajectory between 2019 and 2023, characterized by a transition from marginal profitability to substantial margin expansion beginning in 2021.
- Margin Performance
- Gross profit margin experienced a temporary contraction in 2020 before rising sharply to a peak of 48.97% in 2022 and stabilizing at 47.06% in 2023. Operating profit margins showed the most consistent growth, ascending from 6.64% in 2020 to 30.76% in 2023, indicating improved operational efficiency and cost management. Net profit margins mirrored this trend, expanding from 3.84% in 2019 to 26.46% in 2023, reflecting a strong conversion of revenue into bottom-line earnings.
- Return Metrics
- Return on equity (ROE) saw a dramatic increase from 6.41% in 2019 to a peak of 30.74% in 2022, before adjusting slightly to 28.06% in 2023. Return on assets (ROA) maintained a steady upward climb throughout the period, increasing from 2.51% in 2019 to 16.52% in 2023, signifying a marked improvement in the productivity of the asset base.
The convergence of expanding margins and rising return ratios suggests a period of high operational leverage and enhanced capital efficiency during the latter half of the analyzed timeframe.
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Gross Profit Margin
ON Semiconductor Corp., gross 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) | ||||||
| Gross profit | 3,883,500) | 4,077,200) | 2,714,300) | 1,715,800) | 1,973,600) | |
| Revenue | 8,253,000) | 8,326,200) | 6,739,800) | 5,255,000) | 5,517,900) | |
| Profitability Ratio | ||||||
| Gross profit margin1 | 47.06% | 48.97% | 40.27% | 32.65% | 35.77% | |
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 46.12% | 44.93% | 48.25% | — | — | |
| Analog Devices Inc. | 64.01% | 62.70% | 61.83% | 65.87% | — | |
| Applied Materials Inc. | 46.70% | 46.51% | 47.32% | 44.72% | — | |
| Broadcom Inc. | 68.93% | 66.55% | 61.36% | 56.58% | — | |
| Intel Corp. | 40.04% | 42.61% | 55.45% | — | — | |
| KLA Corp. | 59.81% | 61.00% | 59.93% | — | — | |
| Lam Research Corp. | 44.62% | 45.69% | 46.53% | — | — | |
| Marvell Technology Inc. | 50.47% | 46.26% | 50.13% | — | — | |
| Micron Technology Inc. | -9.11% | 45.18% | 37.62% | — | — | |
| NVIDIA Corp. | 56.93% | 64.93% | 62.34% | — | — | |
| Qualcomm Inc. | 55.70% | 57.84% | 57.51% | 60.67% | — | |
| Texas Instruments Inc. | 62.90% | 68.76% | 67.47% | — | — | |
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 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenue
= 100 × 3,883,500 ÷ 8,253,000 = 47.06%
2 Click competitor name to see calculations.
The company experienced a general upward trajectory in both revenue and gross profit over the five-year period ending December 31, 2023. While a contraction occurred in 2020, subsequent years showed substantial growth, with revenue increasing from 5.52 billion USD in 2019 to a peak of 8.33 billion USD in 2022, before stabilizing at 8.25 billion USD in 2023.
- Gross Profit Margin Trend
- The gross profit margin exhibited a V-shaped recovery followed by a period of significant expansion. After declining from 35.77% in 2019 to 32.65% in 2020, the margin rose consistently to reach 40.27% in 2021 and peaked at 48.97% in 2022. This indicates a marked improvement in production efficiency or pricing power during the 2021-2022 period.
- Profitability and Scale Analysis
- Gross profit grew more aggressively than total revenue between 2020 and 2022. From the 2020 low, revenue increased by approximately 58% by the end of 2022, while gross profit increased by approximately 137%. This divergence highlights a substantial optimization of the cost of goods sold relative to sales growth.
- Recent Performance Stabilization
- A slight moderation in profitability is observed in 2023. Both revenue and gross profit experienced minor decreases, resulting in a gross profit margin of 47.06%. Despite this slight contraction from the 2022 peak, the margin remains significantly elevated compared to 2019 and 2020 levels, suggesting a sustained increase in the company's baseline operational profitability.
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Operating Profit Margin
ON Semiconductor Corp., operating 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) | ||||||
| Operating income | 2,538,700) | 2,360,000) | 1,287,600) | 348,700) | 432,700) | |
| Revenue | 8,253,000) | 8,326,200) | 6,739,800) | 5,255,000) | 5,517,900) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 30.76% | 28.34% | 19.10% | 6.64% | 7.84% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.77% | 5.36% | 22.20% | — | — | |
| Analog Devices Inc. | 31.07% | 27.29% | 23.12% | 26.74% | — | |
| Applied Materials Inc. | 28.86% | 30.20% | 29.87% | 25.37% | — | |
| Broadcom Inc. | 45.25% | 42.84% | 31.03% | 16.80% | — | |
| Intel Corp. | 0.17% | 3.70% | 24.62% | — | — | |
| KLA Corp. | 38.06% | 39.67% | 35.97% | — | — | |
| Lam Research Corp. | 29.69% | 31.24% | 30.64% | — | — | |
| Marvell Technology Inc. | 4.02% | -7.79% | -8.70% | — | — | |
| Micron Technology Inc. | -36.97% | 31.54% | 22.68% | — | — | |
| NVIDIA Corp. | 15.66% | 37.31% | 27.18% | — | — | |
| Qualcomm Inc. | 21.74% | 35.88% | 29.16% | 26.58% | — | |
| Texas Instruments Inc. | 41.85% | 50.63% | 48.84% | — | — | |
| Operating Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 18.20% | 26.84% | 27.90% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Information Technology | 24.34% | 26.23% | 26.58% | — | — | |
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 2023 Calculation
Operating profit margin = 100 × Operating income ÷ Revenue
= 100 × 2,538,700 ÷ 8,253,000 = 30.76%
2 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by a significant expansion in operational efficiency and profitability. While the initial period saw a minor contraction, the subsequent years demonstrate a robust upward trend in operating margins, culminating in a peak of 30.76% by the end of 2023.
- Revenue Trends
- Revenue experienced a slight decrease between 2019 and 2020, moving from US$ 5.52 billion to US$ 5.26 billion. However, a period of strong growth followed, with revenue peaking at US$ 8.33 billion in 2022 before stabilizing at US$ 8.25 billion in 2023.
- Operating Income Growth
- Operating income exhibited exponential growth following a dip in 2020. After reaching a low of US$ 348.7 million in 2020, operating income surged to US$ 1.29 billion in 2021 and reached US$ 2.54 billion by 2023. This indicates a substantial increase in the ability to convert sales into operating profit.
- Operating Profit Margin Analysis
- The operating profit margin shifted from 7.84% in 2019 to 6.64% in 2020, marking the lowest point in the analyzed period. A sharp acceleration occurred starting in 2021, where the margin jumped to 19.10%, followed by a rise to 28.34% in 2022 and 30.76% in 2023. The increase in the margin during 2023, despite a slight decline in total revenue, suggests an enhancement in cost management or a strategic shift toward higher-margin revenue streams.
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Net Profit Margin
ON Semiconductor Corp., net 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) | ||||||
| Net income attributable to ON Semiconductor Corporation | 2,183,700) | 1,902,200) | 1,009,600) | 234,200) | 211,700) | |
| Revenue | 8,253,000) | 8,326,200) | 6,739,800) | 5,255,000) | 5,517,900) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 26.46% | 22.85% | 14.98% | 4.46% | 3.84% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 3.77% | 5.59% | 19.24% | — | — | |
| Analog Devices Inc. | 26.94% | 22.88% | 19.00% | 21.79% | — | |
| Applied Materials Inc. | 25.86% | 25.31% | 25.53% | 21.04% | — | |
| Broadcom Inc. | 39.31% | 34.62% | 24.54% | 12.39% | — | |
| Intel Corp. | 3.11% | 12.71% | 25.14% | — | — | |
| KLA Corp. | 32.27% | 36.06% | 30.04% | — | — | |
| Lam Research Corp. | 25.88% | 26.73% | 26.72% | — | — | |
| Marvell Technology Inc. | -2.76% | -9.44% | -9.34% | — | — | |
| Micron Technology Inc. | -37.54% | 28.24% | 21.16% | — | — | |
| NVIDIA Corp. | 16.19% | 36.23% | 25.98% | — | — | |
| Qualcomm Inc. | 20.19% | 29.27% | 26.94% | 22.09% | — | |
| Texas Instruments Inc. | 37.16% | 43.68% | 42.35% | — | — | |
| Net Profit Margin, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 16.64% | 25.04% | 25.45% | — | — | |
| Net Profit Margin, Industry | ||||||
| Information Technology | 20.24% | 22.27% | 23.48% | — | — | |
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 2023 Calculation
Net profit margin = 100 × Net income attributable to ON Semiconductor Corporation ÷ Revenue
= 100 × 2,183,700 ÷ 8,253,000 = 26.46%
2 Click competitor name to see calculations.
The financial trajectory from 2019 to 2023 is characterized by a substantial and consistent expansion in profitability. While revenue growth remained steady with some volatility, net income experienced an accelerated increase, resulting in a significant uplift in the overall net profit margin.
- Revenue Trends
- Revenue exhibited a general upward trend, rising from 5.52 billion US$ in 2019 to a peak of 8.33 billion US$ in 2022, before experiencing a marginal decline to 8.25 billion US$ in 2023. A slight contraction was noted in 2020, followed by a period of strong recovery through 2022.
- Net Income Growth
- Net income attributable to the corporation demonstrated exponential growth over the five-year period. From 211.7 million US$ in 2019, earnings climbed to 2.18 billion US$ by 2023. The most significant acceleration occurred between 2020 and 2021, where net income more than quadrupled, establishing a new baseline for earnings capacity.
- Net Profit Margin Analysis
- The net profit margin expanded from 3.84% in 2019 to 26.46% in 2023. This consistent upward trajectory indicates a profound improvement in operational efficiency and bottom-line performance. A critical observation is found in the 2023 results, where the margin reached its peak despite a slight decrease in total revenue, suggesting an optimization of cost structures or a strategic shift toward higher-margin product offerings.
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Return on Equity (ROE)
ON Semiconductor Corp., ROE 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) | ||||||
| Net income attributable to ON Semiconductor Corporation | 2,183,700) | 1,902,200) | 1,009,600) | 234,200) | 211,700) | |
| Total ON Semiconductor Corporation stockholders’ equity | 7,782,600) | 6,188,500) | 4,585,400) | 3,538,500) | 3,301,700) | |
| Profitability Ratio | ||||||
| ROE1 | 28.06% | 30.74% | 22.02% | 6.62% | 6.41% | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.53% | 2.41% | 42.18% | — | — | |
| Analog Devices Inc. | 9.32% | 7.54% | 3.66% | 10.17% | — | |
| Applied Materials Inc. | 41.94% | 53.51% | 48.08% | 34.21% | — | |
| Broadcom Inc. | 58.70% | 50.62% | 26.99% | 12.40% | — | |
| Intel Corp. | 1.60% | 7.90% | 20.83% | — | — | |
| KLA Corp. | 116.01% | 237.04% | 61.53% | — | — | |
| Lam Research Corp. | 54.94% | 73.35% | 64.85% | — | — | |
| Marvell Technology Inc. | -1.05% | -2.68% | -3.29% | — | — | |
| Micron Technology Inc. | -13.22% | 17.41% | 13.34% | — | — | |
| NVIDIA Corp. | 19.76% | 36.65% | 25.64% | — | — | |
| Qualcomm Inc. | 33.51% | 71.81% | 90.88% | 85.54% | — | |
| Texas Instruments Inc. | 38.53% | 60.02% | 58.27% | — | — | |
| ROE, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 12.69% | 21.59% | 24.91% | — | — | |
| ROE, Industry | ||||||
| Information Technology | 31.26% | 38.03% | 41.64% | — | — | |
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 2023 Calculation
ROE = 100 × Net income attributable to ON Semiconductor Corporation ÷ Total ON Semiconductor Corporation stockholders’ equity
= 100 × 2,183,700 ÷ 7,782,600 = 28.06%
2 Click competitor name to see calculations.
The profitability profile of the organization underwent a significant transformation between 2019 and 2023, characterized by a sharp acceleration in net earnings and a corresponding surge in capital efficiency.
- Net Income Growth
- Earnings attributable to the corporation remained relatively stable between 2019 and 2020, followed by an exponential increase starting in 2021. Net income rose from US$ 211.7 million in 2019 to US$ 2.18 billion in 2023, representing a substantial increase in absolute profitability over the five-year period.
- Stockholders' Equity Expansion
- Total equity exhibited a consistent upward trajectory, increasing from US$ 3.30 billion in 2019 to US$ 7.78 billion by 2023. This steady growth indicates a continuous accumulation of value within the equity base, supporting the company's long-term financial structure.
- Return on Equity (ROE) Dynamics
- The ROE experienced a dramatic shift, moving from a modest 6.41% in 2019 and 6.62% in 2020 to 22.02% in 2021. This trend peaked in 2022 at 30.74% before slightly moderating to 28.06% in 2023. The rapid ascent in ROE was driven by net income growth far outstripping the growth of stockholders' equity, reflecting a marked improvement in the effectiveness of generating profits from shareholders' capital.
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Return on Assets (ROA)
ON Semiconductor Corp., ROA 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) | ||||||
| Net income attributable to ON Semiconductor Corporation | 2,183,700) | 1,902,200) | 1,009,600) | 234,200) | 211,700) | |
| Total assets | 13,215,200) | 11,978,500) | 9,626,000) | 8,668,000) | 8,425,500) | |
| Profitability Ratio | ||||||
| ROA1 | 16.52% | 15.88% | 10.49% | 2.70% | 2.51% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 1.26% | 1.95% | 25.46% | — | — | |
| Analog Devices Inc. | 6.79% | 5.46% | 2.66% | 5.69% | — | |
| Applied Materials Inc. | 22.31% | 24.41% | 22.80% | 16.19% | — | |
| Broadcom Inc. | 19.33% | 15.69% | 8.91% | 3.90% | — | |
| Intel Corp. | 0.88% | 4.40% | 11.80% | — | — | |
| KLA Corp. | 24.07% | 26.37% | 20.23% | — | — | |
| Lam Research Corp. | 24.02% | 26.78% | 24.59% | — | — | |
| Marvell Technology Inc. | -0.73% | -1.90% | -2.58% | — | — | |
| Micron Technology Inc. | -9.08% | 13.11% | 9.96% | — | — | |
| NVIDIA Corp. | 10.61% | 22.07% | 15.05% | — | — | |
| Qualcomm Inc. | 14.17% | 26.39% | 21.93% | 14.60% | — | |
| Texas Instruments Inc. | 20.12% | 32.16% | 31.48% | — | — | |
| ROA, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 7.13% | 12.17% | 13.29% | — | — | |
| ROA, Industry | ||||||
| Information Technology | 12.34% | 14.33% | 14.52% | — | — | |
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 2023 Calculation
ROA = 100 × Net income attributable to ON Semiconductor Corporation ÷ Total assets
= 100 × 2,183,700 ÷ 13,215,200 = 16.52%
2 Click competitor name to see calculations.
Analysis of the financial performance between December 31, 2019, and December 31, 2023, reveals a period of significant expansion in both profitability and asset efficiency. The trajectory is characterized by a transition from modest returns to high-performance asset utilization, with a sharp acceleration in growth starting in 2021.
- Net Income Growth
- Net income exhibited an exponential upward trend, rising from 211.7 million US dollars in 2019 to 2.18 billion US dollars by 2023. The most substantial surge occurred between 2020 and 2021, where net income increased by approximately 332%, followed by a further increase of 88% in 2022.
- Asset Base Expansion
- Total assets grew steadily from 8.43 billion US dollars in 2019 to 13.22 billion US dollars in 2023. While the asset base expanded by approximately 56% over the five-year period, the growth remained relatively linear compared to the aggressive growth observed in net earnings.
- Return on Assets (ROA) Performance
- The return on assets demonstrated a consistent and strong upward trajectory, climbing from 2.51% in 2019 to 16.52% in 2023. A critical inflection point is observed in 2021, where ROA increased from 2.70% to 10.49%. This indicates that the growth in net income significantly outpaced the growth in total assets, reflecting a marked improvement in operational efficiency and the company's ability to generate profits from its invested capital.
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