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ON Set to Report Q3 Earnings: What's in Store for the Stock?

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On Semiconductor (ON - Free Report) is slated to release its third-quarter 2024 results on Oct. 28.

For third-quarter 2024, onsemi expects revenues between $1.7 billion and $1.8 billion. Earnings are expected to be in the range of 91cents to $1.03 per share.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 97 cents per share, unchanged in the past 30 days. This indicates a decline of 30.22% from the figure reported in the year-ago quarter.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The consensus mark for revenues is pegged at $1.75 billion, suggesting a decline of 19.77% from the year-ago quarter’s reported figure.

onsemi’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.62%.

Let us see how things have shaped up prior to this announcement.

Factors Likely to Have Influenced ON’s Q3 Performance

ON’s third-quarter performance is likely to have benefited from the increased adoption of its products in automotive and industrial end markets, particularly in areas such as electric vehicles, advanced driver-assistance systems and energy infrastructure.

onsemi’s broad-based strength across industrial, computing, consumer and automotive end-markets for silicon carbide and insulated-gate bipolar transistor-based products is likely to have been a tailwind. 

The company is winning market share in the automotive segment thanks to its silicon carbide dominance and intelligent power and sensing solutions. This is expected to have contributed well in the quarter under review.

onsemi is continuing to invest in key areas, such as its vertically integrated SiC manufacturing facility in the Czech Republic, which is expected to have bolstered its European supply chain resilience in the third quarter. This is also expected to have supported its growing silicon carbide product demand.

ON is expanding its product portfolio in power and sensing solutions. Its new offerings, such as the EliteSiC 650-volt MOSFET for AI data centers and power-efficient solutions for automotive and industrial markets, are expected to have driven additional growth in the to-be-reported quarter.

The shift toward higher-resolution image sensors for Advanced Driver Assistance Systems is expected to have contributed to the top-line growth in the third quarter. onsemi’s revenues from 8-megapixel image sensors grew significantly, indicating strong market demand for these higher-resolution image sensors.

However, onsemi’s margin may be under pressure in the near term due to the silicon carbide ramp and frequent buyouts impacting its balance sheet, potentially affecting top-line growth in the to-be-reported quarter.

What Our Model Indicates

Per the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the exact case here.

onsemi has an Earnings ESP of +0.91% and a Zacks Rank #4 (Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Reddit (RDDT - Free Report) has an Earnings ESP of +72.10% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Reddit shares have gained 54% year to date. RDDT is set to report its third-quarter 2024 results on Oct. 29.

Garmin (GRMN - Free Report) has an Earnings ESP of +1.03% and a Zacks Rank of #2 at present.

Garmin shares have gained 25.7% year to date. GRMN is set to report its third-quarter 2024 results on Oct. 30.

Cognizant Technology Solutions (CTSH - Free Report) has an Earnings ESP of +2.86% and a Zacks Rank #3.

Cognizant’s shares have gained 0.7% year to date. CTSH is set to report its third-quarter 2024 results on Oct. 30.

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