Is ON Semiconductor Likely to Outperform?

With shares of ON Semiconductor Corp. (NASDAQ:ONNN) trading at around $8.55, is ONNN an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

The stock has been climbing since the earnings report and guidance were delivered last week, but is this move justifiable? Let’s take a look at the basics first. Q4 saw a GAAP net loss of $0.31 on revenue of $680.2 million. GAAP gross margin was 30.9 percent. And 4.7 million shares of common stock were repurchased.

For FY2012, there was a GAAP net loss of $0.20 on revenue of $2.9 billion. The latter was a 16 percent decrease year-over-year. Also in FY2012, 8.8 million shares of common stock were repurchased, GAAP gross margin was 32.9 percent, and cost structure was reduced.

Overall, there has been an improvement in bookings trend, and the company has achieved significant design wins in automotive and handset applications. Looking ahead to 2013, ON Semiconductor plans to return SANYO Semiconductor products group to profitability.  

Let’s take a look at some important numbers prior to forming an opinion on this stock.