Intrinsic value of ON Semiconductor - ON

Previous Close

$24.04

  Intrinsic Value

$202.80

stock screener

  Rating & Target

str. buy

+744%

Previous close

$24.04

 
Intrinsic value

$202.80

 
Up/down potential

+744%

 
Rating

str. buy

We calculate the intrinsic value of ON stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.1

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  41.90
  38.21
  34.89
  31.90
  29.21
  26.79
  24.61
  22.65
  20.88
  19.30
  17.87
  16.58
  15.42
  14.38
  13.44
  12.60
  11.84
  11.15
  10.54
  9.98
  9.49
  9.04
  8.63
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
Revenue, $m
  7,866
  10,871
  14,664
  19,341
  24,991
  31,686
  39,484
  48,427
  58,540
  69,836
  82,313
  95,960
  110,759
  126,686
  143,714
  161,818
  180,974
  201,159
  222,358
  244,560
  267,760
  291,958
  317,166
  343,397
  370,674
  399,027
  428,492
  459,110
  490,932
  524,011
Variable operating expenses, $m
  5,661
  7,766
  10,421
  13,696
  17,651
  22,339
  27,798
  34,059
  41,140
  49,049
  57,630
  67,184
  77,545
  88,696
  100,618
  113,293
  126,705
  140,837
  155,679
  171,223
  187,466
  204,408
  222,056
  240,421
  259,519
  279,369
  299,999
  321,436
  343,715
  366,874
Fixed operating expenses, $m
  863
  882
  901
  921
  941
  962
  983
  1,004
  1,027
  1,049
  1,072
  1,096
  1,120
  1,145
  1,170
  1,196
  1,222
  1,249
  1,276
  1,304
  1,333
  1,362
  1,392
  1,423
  1,454
  1,486
  1,519
  1,552
  1,586
  1,621
Total operating expenses, $m
  6,524
  8,648
  11,322
  14,617
  18,592
  23,301
  28,781
  35,063
  42,167
  50,098
  58,702
  68,280
  78,665
  89,841
  101,788
  114,489
  127,927
  142,086
  156,955
  172,527
  188,799
  205,770
  223,448
  241,844
  260,973
  280,855
  301,518
  322,988
  345,301
  368,495
Operating income, $m
  1,342
  2,224
  3,342
  4,725
  6,399
  8,386
  10,703
  13,363
  16,374
  19,738
  23,611
  27,680
  32,094
  36,845
  41,926
  47,329
  53,047
  59,074
  65,403
  72,033
  78,961
  86,188
  93,717
  101,552
  109,701
  118,171
  126,974
  136,123
  145,631
  155,515
EBITDA, $m
  2,040
  3,131
  4,511
  6,218
  8,283
  10,733
  13,590
  16,868
  20,579
  24,725
  29,307
  34,321
  39,758
  45,612
  51,871
  58,527
  65,571
  72,994
  80,790
  88,956
  97,490
  106,392
  115,665
  125,316
  135,352
  145,784
  156,626
  167,893
  179,603
  191,777
Interest expense (income), $m
  107
  159
  260
  389
  552
  754
  997
  1,285
  1,621
  2,006
  2,442
  2,928
  3,465
  4,053
  4,690
  5,376
  6,109
  6,889
  7,714
  8,583
  9,496
  10,452
  11,451
  12,493
  13,578
  14,707
  15,882
  17,103
  18,372
  19,690
  21,060
Earnings before tax, $m
  1,182
  1,964
  2,953
  4,172
  5,645
  7,389
  9,417
  11,742
  14,367
  17,297
  20,683
  24,215
  28,041
  32,155
  36,550
  41,220
  46,159
  51,360
  56,820
  62,537
  68,509
  74,738
  81,225
  87,974
  94,993
  102,289
  109,871
  117,751
  125,941
  134,455
Tax expense, $m
  319
  530
  797
  1,127
  1,524
  1,995
  2,543
  3,170
  3,879
  4,670
  5,584
  6,538
  7,571
  8,682
  9,869
  11,129
  12,463
  13,867
  15,341
  16,885
  18,498
  20,179
  21,931
  23,753
  25,648
  27,618
  29,665
  31,793
  34,004
  36,303
Net income, $m
  863
  1,434
  2,156
  3,046
  4,121
  5,394
  6,875
  8,571
  10,488
  12,627
  15,099
  17,677
  20,470
  23,473
  26,682
  30,091
  33,696
  37,493
  41,479
  45,652
  50,012
  54,558
  59,294
  64,221
  69,345
  74,671
  80,206
  85,958
  91,937
  98,152

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  10,215
  14,118
  19,044
  25,119
  32,456
  41,151
  51,278
  62,892
  76,026
  90,696
  106,900
  124,624
  143,843
  164,527
  186,642
  210,154
  235,031
  261,246
  288,777
  317,611
  347,740
  379,167
  411,903
  445,970
  481,395
  518,217
  556,483
  596,247
  637,574
  680,534
Adjusted assets (=assets-cash), $m
  10,215
  14,118
  19,044
  25,119
  32,456
  41,151
  51,278
  62,892
  76,026
  90,696
  106,900
  124,624
  143,843
  164,527
  186,642
  210,154
  235,031
  261,246
  288,777
  317,611
  347,740
  379,167
  411,903
  445,970
  481,395
  518,217
  556,483
  596,247
  637,574
  680,534
Revenue / Adjusted assets
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
  0.770
Average production assets, $m
  5,443
  7,523
  10,147
  13,384
  17,294
  21,927
  27,323
  33,511
  40,510
  48,327
  56,961
  66,405
  76,645
  87,666
  99,450
  111,978
  125,234
  139,202
  153,872
  169,236
  185,290
  202,035
  219,479
  237,630
  256,506
  276,127
  296,516
  317,704
  339,725
  362,616
Working capital, $m
  771
  1,065
  1,437
  1,895
  2,449
  3,105
  3,869
  4,746
  5,737
  6,844
  8,067
  9,404
  10,854
  12,415
  14,084
  15,858
  17,735
  19,714
  21,791
  23,967
  26,240
  28,612
  31,082
  33,653
  36,326
  39,105
  41,992
  44,993
  48,111
  51,353
Total debt, $m
  4,808
  7,204
  10,229
  13,959
  18,464
  23,802
  30,020
  37,151
  45,216
  54,223
  64,172
  75,055
  86,855
  99,555
  113,134
  127,570
  142,845
  158,941
  175,845
  193,549
  212,048
  231,344
  251,444
  272,361
  294,112
  316,721
  340,216
  364,632
  390,006
  416,384
Total liabilities, $m
  6,272
  8,669
  11,693
  15,423
  19,928
  25,266
  31,485
  38,616
  46,680
  55,687
  65,637
  76,519
  88,319
  101,019
  114,598
  129,034
  144,309
  160,405
  177,309
  195,013
  213,512
  232,808
  252,909
  273,825
  295,576
  318,185
  341,680
  366,096
  391,470
  417,848
Total equity, $m
  3,943
  5,450
  7,351
  9,696
  12,528
  15,884
  19,793
  24,276
  29,346
  35,009
  41,263
  48,105
  55,523
  63,507
  72,044
  81,119
  90,722
  100,841
  111,468
  122,598
  134,228
  146,358
  158,995
  172,144
  185,818
  200,032
  214,802
  230,151
  246,104
  262,686
Total liabilities and equity, $m
  10,215
  14,119
  19,044
  25,119
  32,456
  41,150
  51,278
  62,892
  76,026
  90,696
  106,900
  124,624
  143,842
  164,526
  186,642
  210,153
  235,031
  261,246
  288,777
  317,611
  347,740
  379,166
  411,904
  445,969
  481,394
  518,217
  556,482
  596,247
  637,574
  680,534
Debt-to-equity ratio
  1.220
  1.320
  1.390
  1.440
  1.470
  1.500
  1.520
  1.530
  1.540
  1.550
  1.560
  1.560
  1.560
  1.570
  1.570
  1.570
  1.570
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.580
  1.590
Adjusted equity ratio
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386
  0.386

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  863
  1,434
  2,156
  3,046
  4,121
  5,394
  6,875
  8,571
  10,488
  12,627
  15,099
  17,677
  20,470
  23,473
  26,682
  30,091
  33,696
  37,493
  41,479
  45,652
  50,012
  54,558
  59,294
  64,221
  69,345
  74,671
  80,206
  85,958
  91,937
  98,152
Depreciation, amort., depletion, $m
  699
  907
  1,169
  1,493
  1,884
  2,347
  2,887
  3,506
  4,205
  4,987
  5,696
  6,640
  7,665
  8,767
  9,945
  11,198
  12,523
  13,920
  15,387
  16,924
  18,529
  20,204
  21,948
  23,763
  25,651
  27,613
  29,652
  31,770
  33,972
  36,262
Funds from operations, $m
  1,562
  2,341
  3,325
  4,539
  6,005
  7,741
  9,762
  12,077
  14,694
  17,614
  20,795
  24,317
  28,134
  32,240
  36,627
  41,289
  46,219
  51,413
  56,866
  62,576
  68,541
  74,762
  81,242
  87,984
  94,996
  102,284
  109,858
  117,729
  125,909
  134,414
Change in working capital, $m
  228
  295
  372
  458
  554
  656
  764
  876
  991
  1,107
  1,223
  1,337
  1,450
  1,561
  1,669
  1,774
  1,877
  1,978
  2,078
  2,176
  2,274
  2,371
  2,470
  2,571
  2,673
  2,779
  2,888
  3,001
  3,119
  3,242
Cash from operations, $m
  1,334
  2,046
  2,953
  4,080
  5,451
  7,085
  8,997
  11,201
  13,703
  16,507
  19,572
  22,980
  26,684
  30,679
  34,958
  39,514
  44,342
  49,435
  54,789
  60,400
  66,267
  72,390
  78,772
  85,414
  92,323
  99,505
  106,970
  114,728
  122,791
  131,172
Maintenance CAPEX, $m
  -384
  -544
  -752
  -1,015
  -1,338
  -1,729
  -2,193
  -2,732
  -3,351
  -4,051
  -4,833
  -5,696
  -6,640
  -7,665
  -8,767
  -9,945
  -11,198
  -12,523
  -13,920
  -15,387
  -16,924
  -18,529
  -20,204
  -21,948
  -23,763
  -25,651
  -27,613
  -29,652
  -31,770
  -33,972
New CAPEX, $m
  -1,608
  -2,080
  -2,625
  -3,237
  -3,910
  -4,633
  -5,396
  -6,188
  -6,999
  -7,817
  -8,634
  -9,444
  -10,241
  -11,021
  -11,784
  -12,528
  -13,256
  -13,968
  -14,670
  -15,364
  -16,054
  -16,746
  -17,443
  -18,152
  -18,876
  -19,620
  -20,390
  -21,188
  -22,021
  -22,891
Cash from investing activities, $m
  -1,992
  -2,624
  -3,377
  -4,252
  -5,248
  -6,362
  -7,589
  -8,920
  -10,350
  -11,868
  -13,467
  -15,140
  -16,881
  -18,686
  -20,551
  -22,473
  -24,454
  -26,491
  -28,590
  -30,751
  -32,978
  -35,275
  -37,647
  -40,100
  -42,639
  -45,271
  -48,003
  -50,840
  -53,791
  -56,863
Free cash flow, $m
  -657
  -578
  -424
  -171
  203
  722
  1,408
  2,280
  3,353
  4,639
  6,105
  7,840
  9,803
  11,993
  14,408
  17,041
  19,888
  22,943
  26,198
  29,649
  33,290
  37,116
  41,125
  45,314
  49,684
  54,234
  58,968
  63,888
  69,000
  74,309
Issuance/(repayment) of debt, $m
  1,856
  2,397
  3,024
  3,730
  4,505
  5,339
  6,218
  7,131
  8,065
  9,007
  9,949
  10,882
  11,800
  12,700
  13,579
  14,436
  15,275
  16,096
  16,904
  17,704
  18,499
  19,296
  20,100
  20,917
  21,751
  22,609
  23,495
  24,416
  25,375
  26,377
Issuance/(repurchase) of shares, $m
  301
  73
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,157
  2,470
  3,024
  3,730
  4,505
  5,339
  6,218
  7,131
  8,065
  9,007
  9,949
  10,882
  11,800
  12,700
  13,579
  14,436
  15,275
  16,096
  16,904
  17,704
  18,499
  19,296
  20,100
  20,917
  21,751
  22,609
  23,495
  24,416
  25,375
  26,377
Total cash flow (excl. dividends), $m
  1,500
  1,891
  2,601
  3,559
  4,708
  6,061
  7,627
  9,411
  11,417
  13,646
  16,054
  18,722
  21,603
  24,693
  27,986
  31,478
  35,163
  39,039
  43,103
  47,353
  51,789
  56,412
  61,225
  66,231
  71,435
  76,843
  82,463
  88,304
  94,374
  100,686
Retained Cash Flow (-), $m
  -1,164
  -1,507
  -1,901
  -2,345
  -2,832
  -3,356
  -3,909
  -4,483
  -5,070
  -5,663
  -6,255
  -6,841
  -7,419
  -7,984
  -8,536
  -9,076
  -9,603
  -10,119
  -10,627
  -11,130
  -11,630
  -12,131
  -12,636
  -13,150
  -13,674
  -14,213
  -14,771
  -15,349
  -15,952
  -16,583
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  72
  102
  141
  191
  251
  325
  412
  513
  630
  761
  908
  1,070
  1,247
  1,440
  1,647
  1,868
  2,104
  2,353
  2,615
  2,891
  3,179
  3,481
  3,795
  4,123
  4,464
  4,819
  5,187
  5,570
  5,968
  6,382
Cash available for distribution, $m
  336
  385
  699
  1,214
  1,876
  2,705
  3,717
  4,928
  6,347
  7,984
  9,800
  11,881
  14,185
  16,709
  19,450
  22,402
  25,560
  28,920
  32,476
  36,223
  40,159
  44,281
  48,589
  53,081
  57,761
  62,630
  67,692
  72,954
  78,422
  84,104
Discount rate, %
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
PV of cash for distribution, $m
  321
  351
  605
  991
  1,437
  1,935
  2,467
  3,016
  3,556
  4,066
  4,501
  4,880
  5,165
  5,343
  5,406
  5,356
  5,197
  4,941
  4,603
  4,203
  3,759
  3,294
  2,827
  2,374
  1,951
  1,568
  1,231
  943
  705
  514
Current shareholders' claim on cash, %
  97.1
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6
  96.6

ON Semiconductor Corporation offers a portfolio of sensors, power management, connectivity, custom and system on chip (SoC), analog, logic, timing, and discrete devices. The Company's segments include Power Solutions Group, Analog Solutions Group and Image Sensor Group. The Power Solutions Group offers a range of discrete, module and integrated semiconductor products. The Analog Solutions Group designs and develops analog, mixed-signal and logic application specific integrated circuits (ASICs) and application specific standard products (ASSPs), and power solutions. The Image Sensor Group designs and develops complementary metal oxide semiconductor (CMOS) and charge-coupled device (CCD) image sensors, as well as proximity sensors, image signal processors, and actuator drivers for autofocus and image stabilization for various end users in the automotive, industrial, consumer, wireless, medical, and aerospace/defense markets.

FINANCIAL RATIOS  of  ON Semiconductor (ON)

Valuation Ratios
P/E Ratio 55.3
Price to Sales 2.6
Price to Book 5.4
Price to Tangible Book
Price to Cash Flow 17.3
Price to Free Cash Flow 27.2
Growth Rates
Sales Growth Rate 11.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -22.1%
Cap. Spend. - 3 Yr. Gr. Rate 6.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 165.3%
Total Debt to Equity 195.2%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.4%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity 10.5%
Return On Equity - 3 Yr. Avg. 11.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 33.2%
Gross Margin - 3 Yr. Avg. 33.9%
EBITDA Margin 16.7%
EBITDA Margin - 3 Yr. Avg. 16.5%
Operating Margin 8.2%
Oper. Margin - 3 Yr. Avg. 7.6%
Pre-Tax Margin 4.6%
Pre-Tax Margin - 3 Yr. Avg. 5.7%
Net Profit Margin 4.7%
Net Profit Margin - 3 Yr. Avg. 5.5%
Effective Tax Rate -2.2%
Eff/ Tax Rate - 3 Yr. Avg. 0.9%
Payout Ratio 0%

ON stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ON stock intrinsic value calculation we used $5543 million for the last fiscal year's total revenue generated by ON Semiconductor. The default revenue input number comes from 2017 income statement of ON Semiconductor. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ON stock valuation model: a) initial revenue growth rate of 41.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.5%, whose default value for ON is calculated based on our internal credit rating of ON Semiconductor, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of ON Semiconductor.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ON stock the variable cost ratio is equal to 72.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $844 million in the base year in the intrinsic value calculation for ON stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for ON Semiconductor.

Corporate tax rate of 27% is the nominal tax rate for ON Semiconductor. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ON stock is equal to 1.3%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ON are equal to 69.2%.

Life of production assets of 10 years is the average useful life of capital assets used in ON Semiconductor operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ON is equal to 9.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2779 million for ON Semiconductor - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 422 million for ON Semiconductor is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of ON Semiconductor at the current share price and the inputted number of shares is $10.1 billion.

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COMPANY NEWS

▶ 7 Chip Stocks Poised for a Big Short-Term Bounce   [Jul-05-18 06:00AM  Investopedia]
▶ Why ON Semiconductor Corp. Shares Gained 14% in May   [Jun-07-18 04:51PM  Motley Fool]
▶ 3 Superb Semiconductor Stocks for Your Portfolio   [Jun-05-18 10:17AM  InvestorPlace]
▶ Chip Deals Perk Up With Cohu, ON Semiconductor Acquisitions   [May-09-18 04:13PM  Investor's Business Daily]
▶ ON Semiconductors First Quarter 2018 Was Good   [May-03-18 07:30AM  Motley Fool]
▶ ON Semiconductor reports big income bump in latest quarter   [Apr-30-18 05:23PM  American City Business Journals]
▶ ON Semiconductor Corp.: 1Q Earnings Snapshot   [05:03AM  Associated Press]
▶ ON Semiconductor Reports First Quarter 2018 Results   [Apr-29-18 01:00PM  Business Wire]
▶ ON Semiconductor Names 2017 Supplier Award Winners   [Mar-27-18 07:00PM  Business Wire]
▶ 9 Takeover Targets Broadcom May Pursue After Qualcomm   [Mar-16-18 02:00PM  Investopedia]
▶ Dow Stocks Lead As McDonald's, Apple Gain   [Mar-15-18 11:00AM  Investor's Business Daily]
▶ Bulls charge into Cree, this semi stock   [Mar-06-18 01:50PM  CNBC Videos]
▶ 4 Bargain Chip Stocks   [Mar-02-18 11:44AM  Investopedia]
▶ 3 "Internet of Things" Stocks to Buy for 2018   [Feb-12-18 01:43PM  Zacks]
▶ ON Semiconductor Stock Falls Despite Upbeat Fourth-Quarter Report   [Feb-05-18 04:50PM  Investor's Business Daily]
▶ ON Semiconductor reports colossal earnings bump in latest quarter   [02:05PM  American City Business Journals]
▶ ON Semiconductor Corp. beats Street 4Q forecasts   [Feb-02-18 07:09PM  Associated Press]
▶ Scott Black: A No-Performance-Fee Hedge Fund Manager   [Jan-22-18 04:35PM  GuruFocus.com]
▶ ON Semiconductor Earns Membership In 95-Plus Composite Rating Club   [Jan-16-18 03:00AM  Investor's Business Daily]
▶ CES 2018 Boosted These Chip And Technology Suppliers   [Jan-12-18 04:24PM  Investor's Business Daily]
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