The company has a beta of 0.0192. Let's try to break down what ON Semiconductor's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, ON Semiconductor will likely underperform. The beta indicator helps investors understand whether ON Semiconductor moves in the same direction as the rest of the market, and how volatile (i.e., risky) it is compared to the market (i.e., selected benchmark). In other words, if ON Semiconductor deviates very little from the market, it does not add much risk to the portfolio, but it also doesn't increase the expected returns.
There are currently many different techniques concerning forecasting the market as a whole as well as
predicting future values of individual securities such as ON Semiconductor. Regardless of method or technology, to accurately forecast the stock market is more a matter of luck rather than a particular technique. Nevertheless, trying to predict the stock market accurately is still an essential part of the overall investment decision process. Using different forecasting techniques and comparing the results might improve your chances of accuracy even though unexpected events may often change the
market sentiment and impact your forecasting results.
Predictive Modules for ON Semiconductor
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of ON Semiconductor's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as ON Semiconductor. Your research has to be compared to or analyzed against ON Semiconductor's peers to derive any actionable benefits. When done correctly, ON Semiconductor's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in ON Semiconductor.
How important is ON Semiconductor's Liquidity
ON Semiconductor
financial leverage refers to using borrowed capital as a funding source to finance ON Semiconductor ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. ON Semiconductor financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to ON Semiconductor's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of ON Semiconductor's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between ON Semiconductor's total debt and its cash.
Breaking it down a bit more
The latest price rise of ON Semiconductor may encourage institutional investors to take a closer look at the company as it closed today at a share price of
20.45 on
10,260,767 in trading volume. The company management teams may have good odds in positioning the company resources to exploit market volatility in
September. The stock standard deviation of daily returns for 30 days investing horizon is currently 3.54. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from ON Semiconductor partners.
Returns Breakdown
| Return on Investment | 7.24 |
| Return on Assets | 0.0267 |
| Return on Equity | 0.0667 |
| Return Capital | 0.0821 |
| Return on Sales | 0.0884 |
Our take on ON Semiconductor small slide
Latest Sortino Ratio is up to 0.09. Price may slide again. ON Semiconductor shows above-average downside volatility for the selected time horizon. We advise investors to inspect ON Semiconductor further and ensure that all market timing and asset allocation strategies are consistent with the estimation of ON Semiconductor future alpha.
The Bottom Line
Whereas some other firms in the semiconductors industry are either recovering or due for a correction, ON Semiconductor may not be as strong as the others in terms of longer-term growth potentials. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor exit any shares of ON Semiconductor at this time. The ON Semiconductor risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to ON Semiconductor.
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Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of ON Semiconductor. Please refer to our
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