ON Semiconductor Bonds
| ON Stock | USD 60.65 0.06 0.1% |
ON Semiconductor holds a debt-to-equity ratio of 0.613. At this time, ON Semiconductor's Net Debt is very stable compared to the past year. As of the 23rd of April 2024, Short Term Debt is likely to grow to about 834.5 M, while Short and Long Term Debt Total is likely to drop about 2 B. ON Semiconductor's financial risk is the risk to ON Semiconductor stockholders that is caused by an increase in debt. In other words, with a high degree of financial leverage come high-interest payments, which usually reduce Earnings Per Share (EPS).
Asset vs Debt
Equity vs Debt
ON Semiconductor's liquidity is one of the most fundamental aspects of both its future profitability and its ability to meet different types of ongoing financial obligations. ON Semiconductor's cash, liquid assets, total liabilities, and shareholder equity can be utilized to evaluate how much leverage the Company is using to sustain its current operations. For traders, higher-leverage indicators usually imply a higher risk to shareholders. In addition, it helps ON Semiconductor Stock's retail investors understand whether an upcoming fall or rise in the market will negatively affect ON Semiconductor's stakeholders.
ON Semiconductor Quarterly Net Debt |
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For most companies, including ON Semiconductor, marketable securities, inventories, and receivables are the most common assets that could be converted to cash. However, for the executing running ON Semiconductor the most critical issue when dealing with liquidity needs is whether the current assets are properly aligned with its current liabilities. If not, management will need to obtain alternative financing to ensure that there are always enough cash equivalents on the balance sheet in reserve to pay for obligations.
Price Book 3.6806 | Book Value 18.252 | Operating Margin 0.3071 | Profit Margin 0.2646 | Return On Assets 0.1294 |
Given that ON Semiconductor's debt-to-equity ratio measures a Company's obligations relative to the value of its net assets, it is usually used by traders to estimate the extent to which ON Semiconductor is acquiring new debt as a mechanism of leveraging its assets. A high debt-to-equity ratio is generally associated with increased risk, implying that it has been aggressive in financing its growth with debt. Another way to look at debt-to-equity ratios is to compare the overall debt load of ON Semiconductor to its assets or equity, showing how much of the company assets belong to shareholders vs. creditors. If shareholders own more assets, ON Semiconductor is said to be less leveraged. If creditors hold a majority of ON Semiconductor's assets, the Company is said to be highly leveraged.
At this time, ON Semiconductor's Net Debt is very stable compared to the past year. As of the 23rd of April 2024, Short Term Debt is likely to grow to about 834.5 M, while Short and Long Term Debt Total is likely to drop about 2 B. ON Semiconductor |
ON Semiconductor Bond Ratings
ON Semiconductor bond ratings play a critical role in determining how much ON Semiconductor have to pay to access credit markets, i.e., the amount of interest on their issued debt. The threshold between investment-grade and speculative-grade ratings has important market implications for ON Semiconductor's borrowing costs.| Piotroski F Score | 6 Healthy |
| Beneish M Score | -2.41 Unlikely Manipulator |
ON Semiconductor Debt to Cash Allocation
As ON Semiconductor follows its natural business cycle, the capital allocation decisions will not magically go away. ON Semiconductor's decision-makers have to determine if most of the cash flows will be poured back into or reinvested in the business, reserved for other projects beyond operational needs, or paid back to stakeholders and investors. Many companies eventually find out that there is only so much market out there to be conquered, and adding the next product or service is only half as profitable per unit as their current endeavors. Eventually, the company will reach a point where cash flows are strong, and extra cash is available but not fully utilized. In this case, the company may start buying back its stock from the public or issue more dividends.
The company reports 3.36 B of total liabilities with total debt to equity ratio (D/E) of 0.61, which is normal for its line of buisiness. ON Semiconductor has a current ratio of 2.96, indicating that it is in good position to pay out its debt commitments in time. Debt can assist ON Semiconductor until it has trouble settling it off, either with new capital or with free cash flow. So, ON Semiconductor's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like ON Semiconductor sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for ON Semiconductor to invest in growth at high rates of return. When we think about ON Semiconductor's use of debt, we should always consider it together with cash and equity.ON Semiconductor Total Assets Over Time
ON Semiconductor Assets Financed by Debt
Typically, companies with high debt-to-asset ratios are said to be highly leveraged. The higher the ratio, the greater risk will be associated with the ON Semiconductor's operation. In addition, a high debt-to-assets ratio may indicate a low borrowing capacity of ON Semiconductor, which in turn will lower the firm's financial flexibility. Like all other financial ratios, a an ON Semiconductor debt ratio should be compared their industry average or other competing firms.ON Semiconductor Corporate Bonds Issued
ON Semiconductor issues bonds to finance its operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world's largest securities market. ON Semiconductor uses the proceeds from bond sales for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt. Most ON Semiconductor bonds can be classified according to their maturity, which is the date when ON Semiconductor has to pay back the principal to investors. Maturities can be short-term, medium-term, or long-term (more than ten years). Longer-term bonds usually offer higher interest rates but may entail additional risks.
ON Semiconductor Short Long Term Debt Total
Short Long Term Debt Total |
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Understaning ON Semiconductor Use of Financial Leverage
ON Semiconductor financial leverage ratio helps in determining the effect of debt on the overall profitability of the company. It measures ON Semiconductor's total debt position, including all of outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of ON Semiconductor assets, the company is considered highly leveraged. Understanding the composition and structure of overall ON Semiconductor debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business and if it is worth investing in it. Financial leverage can amplify the potential profits to ON Semiconductor's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of ON Semiconductor's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets).
| Last Reported | Projected for Next Year | ||
| Short and Long Term Debt Total | 3.4 B | 2 B | |
| Net Debt | 876.8 M | 1.2 B | |
| Long Term Debt | 2.5 B | 1.8 B | |
| Short Term Debt | 794.8 M | 834.5 M | |
| Long Term Debt Total | 3.4 B | 2 B | |
| Short and Long Term Debt | 794 M | 447 M | |
| Net Debt To EBITDA | 0.26 | 0.25 | |
| Debt To Equity | 0.43 | 0.41 | |
| Interest Debt Per Share | 7.97 | 4.36 | |
| Debt To Assets | 0.25 | 0.24 | |
| Long Term Debt To Capitalization | 0.25 | 0.24 | |
| Total Debt To Capitalization | 0.30 | 0.29 | |
| Debt Equity Ratio | 0.43 | 0.41 | |
| Debt Ratio | 0.25 | 0.24 | |
| Cash Flow To Debt Ratio | 0.59 | 0.62 |
ON Semiconductor Investors Sentiment
The influence of ON Semiconductor's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in ON Semiconductor. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock market does not have solid backing from leading economists and market statisticians.
Investor biases related to ON Semiconductor's public news can be used to forecast risks associated with an investment in ON Semiconductor. The trend in average sentiment can be used to explain how an investor holding ON Semiconductor can time the market purely based on public headlines and social activities around ON Semiconductor. Please note that most equities that are difficult to arbitrage are affected by market sentiment the most.
ON Semiconductor's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for ON Semiconductor's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average ON Semiconductor's news discussions. The higher the estimated score, the more favorable is the investor's outlook on ON Semiconductor.
ON Semiconductor Implied Volatility | 54.46 |
ON Semiconductor's implied volatility exposes the market's sentiment of ON Semiconductor stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if ON Semiconductor's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that ON Semiconductor stock will not fluctuate a lot when ON Semiconductor's options are near their expiration.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards ON Semiconductor in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, ON Semiconductor's short interest history, or implied volatility extrapolated from ON Semiconductor options trading.
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Is ON Semiconductor's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of ON Semiconductor. If investors know ON Semiconductor will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about ON Semiconductor listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.05) | Earnings Share 4.89 | Revenue Per Share 19.162 | Quarterly Revenue Growth (0.04) | Return On Assets 0.1294 |
The market value of ON Semiconductor is measured differently than its book value, which is the value of ON Semiconductor that is recorded on the company's balance sheet. Investors also form their own opinion of ON Semiconductor's value that differs from its market value or its book value, called intrinsic value, which is ON Semiconductor's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because ON Semiconductor's market value can be influenced by many factors that don't directly affect ON Semiconductor's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between ON Semiconductor's value and its price as these two are different measures arrived at by different means. Investors typically determine if ON Semiconductor is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, ON Semiconductor's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
What is Financial Leverage?
Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. In most cases, the debt provider will limit how much risk it is ready to take and indicate a limit on the extent of the leverage it will allow. In the case of asset-backed lending, the financial provider uses the assets as collateral until the borrower repays the loan. In the case of a cash flow loan, the general creditworthiness of the company is used to back the loan. The concept of leverage is common in the business world. It is mostly used to boost the returns on equity capital of a company, especially when the business is unable to increase its operating efficiency and returns on total investment. Because earnings on borrowing are higher than the interest payable on debt, the company's total earnings will increase, ultimately boosting stockholders' profits.Leverage and Capital Costs
The debt to equity ratio plays a role in the working average cost of capital (WACC). The overall interest on debt represents the break-even point that must be obtained to profitability in a given venture. Thus, WACC is essentially the average interest an organization owes on the capital it has borrowed for leverage. Let's say equity represents 60% of borrowed capital, and debt is 40%. This results in a financial leverage calculation of 40/60, or 0.6667. The organization owes 10% on all equity and 5% on all debt. That means that the weighted average cost of capital is (.4)(5) + (.6)(10) - or 8%. For every $10,000 borrowed, this organization will owe $800 in interest. Profit must be higher than 8% on the project to offset the cost of interest and justify this leverage.Benefits of Financial Leverage
Leverage provides the following benefits for companies:- Leverage is an essential tool a company's management can use to make the best financing and investment decisions.
- It provides a variety of financing sources by which the firm can achieve its target earnings.
- Leverage is also an essential technique in investing as it helps companies set a threshold for the expansion of business operations. For example, it can be used to recommend restrictions on business expansion once the projected return on additional investment is lower than the cost of debt.