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ON trades against a final fair-value range of $17.19-$28.02, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs.
A protracted global manufacturing recession coupled with stalled EV adoption permanently impairs revenue growthRevenue growthYear-over-year change in revenue, expressed as a percentage. The starting point for any forward-earnings model and the lens through which scale, mix, and pricing power become visible. to low single digits. Structural capexCapital expendituresCash spent on acquiring or upgrading property, plant, and equipment. Splits into maintenance capex (sustaining current capacity) and growth capex (expanding capacity). requirements for underutilized SiC fabs drag free cash flowFree cash flowOperating cash flow minus capital expenditures. The cash a business generates after maintaining and growing its asset base — the closest accounting proxy for owner-economics. conversion below historical averages, compressing the terminal multipleTerminal multipleThe exit P/E or EV/EBITDA we apply to the final year of an explicit forecast. Anchored to the business's long-run quality and the prevailing risk-free rate. to 12x.
Aggressive capacity expansion by competitors commoditizes the SiC power market, driving gross margins permanently below 30%.
Global auto production volumes decline and EV penetration plateaus, leaving ON with significant stranded fab capacity.
Next-generation SiC node migrations require higher-than-expected capital intensity, permanently suppressing FCF generation despite revenue growth.
| Line item | 2022-12-31 | 2023-12-31 | 2024-12-31 | 2025-12-31 | Trend |
|---|---|---|---|---|---|
| Revenue | $8.33B | $8.25B-1.0% | $7.08B-14.2% | $6.00B-15.3% | -10.4% |
| Gross profit | $4.08B | $3.88B | $3.22B | $1.98B | -21.3% |
| Operating income | $2.76B | $2.61B | $1.90B | $751.1M | -35.2% |
| Net income | $1.90B | $2.18B+14.7% | $1.57B-28.0% | $121.0M-92.3% | -60.1% |
| EPS (diluted) | $4.24 | $4.89 | $3.63 | $0.29 | -59.1% |
| EBITDA | $3.01B | $3.22B | $2.54B | $888.2M | -33.4% |
| R&D | $600.2M | $577.3M | $612.7M | $583.6M | -0.9% |
| SG&A | $631.1M | $641.5M | $649.8M | $604.8M | -1.4% |
Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.
Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
| Deterioration versus the report thesis |
| Inventory days outstanding rising above 150 days systemically. | Monitor | Deterioration versus the report thesis |
| Management officially walking back long-term free cash flow margin targets. | Monitor | Deterioration versus the report thesis |
