ON Semiconductor Q2 earnings: ‘bigger trends are in our favour’

ON Semiconductor Corp (NASDAQ: ON) is in focus on Monday after reporting its financial results for the second quarter that handily topped Street estimates.

ON stock up on encouraging outlook

The semiconductor supplier company also issued upbeat guidance for the current quarter today. ON now sees its sales falling between $2.1 billion and $2.20 billion in Q3 on up to $1.41 a share of adjusted earnings.

In comparison, analysts were at $2.07 billion and $1.21 per share. On CNBC’s “Squawk on the Street”, CEO Hassane El-Khoury said:

Bigger trends are in our favour. Even outside the silicon carbide, the core business is growing. So, there’s strength in demand as far as we see in those two markets [automotive and industrial].

Year-to-date, shares of the Phoenix-headquartered firm are up a whopping 80%.

Notable figures in ON Q2 earnings report

• Earned $576.6 million versus the year-ago $455.8 million
• Per-share earnings also increased from $1.02 to $1.29
• Adjusted EPS printed at $1.33 as per the press release
• Revenue remained roughly unchanged at $2.09 billion
• Consensus was $1.21 a share on $2.02 billion in revenue

Note that continued adoption of electric vehicles is a major tailwind for ON Semiconductor. According to its Chief Executive:

We have about $50 worth of content in an ICE engine drivetrain. That content per car goes to $750 when the vehicle goes to electrification.

ON Semiconductor’s sales from individual segments

ON Semiconductor saw a 9.0% hit to its advanced-solutions sales in the recently concluded quarter.

That was offset by a 6.0% increase in power-solutions revenue. CEO El-Khoury added in his interview with CNBC:

Penetration of EVs in total vehicles made is only going to be 50% by 2030. So, this is a multi-decade ramp.

Intelligent-sensing also gained 4.0% in Q2. Wall Street currently has a consensus “overweight” rating on the semiconductor stock.