ON vs MTSI: which stock is the better value?

A comparative analysis of ON Semiconductor Corporation and MACOM Technology Solutions Holdings Inc reveals intriguing insights into their valuations.

In the competitive landscape of the semiconductor industry, investors often seek value opportunities among leading companies. This analysis compares ON Semiconductor Corporation (ON) and MACOM Technology Solutions Holdings Inc (MTSI) based on their current financial metrics. Both companies are part of the Information Technology sector and are well-regarded in their field, but how do they stack up against each other in terms of valuation?

Investor takeaway: While ON Semiconductor appears cheaper on several key multiples, this does not necessarily indicate it is the superior investment choice. Each company has its unique strengths and weaknesses that investors should consider.

Valuation Metrics Comparison

ON Semiconductor Corporation shows lower valuation multiples across several key metrics, suggesting it may be a more attractive option for value investors.

Valuation Metrics Overview

When comparing the valuation metrics of ON and MTSI, ON Semiconductor Corporation demonstrates a more attractive profile in terms of P/E, PEG, and P/B ratios. Specifically, ON's P/E ratio stands at 50.0, while MTSI's is significantly higher at 105.1. The PEG ratio for ON is 0.16, indicating a potentially undervalued stock relative to its growth, whereas MTSI's PEG of 2.05 suggests a higher growth expectation that comes with a premium price. The price-to-book (P/B) ratio also reflects this trend, with ON at 4.18 compared to MTSI's 16.36. This data presents a mixed picture, as ON appears cheaper on most multiples, yet MTSI's higher ROE could justify its elevated valuations.

Market Capitalisation and Analyst Consensus

As of the latest data, ON Semiconductor Corporation has a market capitalisation of US$30.2 billion, while MACOM Technology Solutions Holdings Inc has a slightly lower market cap of US$25.2 billion. Both companies have received a 'Buy' consensus from analysts, indicating positive sentiment towards their future performance. The target price for ON is US$104.46, suggesting a potential upside from its current trading price of US$77.53. In contrast, MTSI has a target price of US$395.33, reflecting strong growth expectations despite its high current valuation.