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Investors Business Daily
Investors Business Daily
Technology
PATRICK SEITZ

Chipmaker Onsemi Delivers Beat-And-Raise Report But Stock Falls

Chipmaker Onsemi early Monday beat Wall Street's targets for the second quarter and guided higher for the current period. But ON stock fell after the report.

The Phoenix-based company earned an adjusted $1.34 a share on sales of $2.09 billion in the June quarter. Analysts polled by FactSet expected Onsemi earnings of $1.25 a share on sales of $2.01 billion. On a year-over-year basis, Onsemi earnings jumped 113% while sales climbed 25%.

For the current quarter, Onsemi forecast adjusted earnings of $1.31 a share on sales of $2.12 billion. That's based on the midpoint of its outlook. Wall Street had predicted Onsemi earnings of $1.22 a share on sales of $2.02 billion for the third quarter. In the year-earlier period, Onsemi earned 87 cents a share on sales of $1.74 billion.

One knock on the company's guidance is a possible dip in gross profit margin. It forecast a gross margin of 48% to 50% in the September quarter. The midpoint of 49% would be below the 49.7% it achieved in the June quarter. Analysts had been looking for a gross margin of 49.3% in the third quarter.

ON Stock Retreats After Recent Runup

On the stock market today, ON stock dropped 4.7% to close at 63.66. In July, it surged 32.7% to 66.78.

IBD analysis indicates that ON stock has formed a double-bottom base with a buy point of 67.29. That base is within a 30-week consolidation period with a buy point of 71.35, according to IBD MarketSmith charts.

The relative strength line for ON stock has been rising as it has outperformed the S&P 500.

"Our leadership in the accelerating megatrends of vehicle electrification, ADAS (advanced driver-assistance systems), energy infrastructure and factory automation have enabled us to extend long-term supply agreements and increase demand visibility," Chief Executive Hassane El-Khoury said in a news release.

He added, "While we are optimistic about our outlook, we remain sensitive to dynamic market conditions."

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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