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ON Semiconductor and Meta Platforms have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – March 18, 2022 – Zacks Equity Research shares ON Semiconductor (ON - Free Report) as the Bull of the Day and Meta Platforms asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on General Electric Company's (GE - Free Report) , Griffon Corp. (GFF - Free Report) , and Franklin Electric Co., Inc. (FELE - Free Report)
ON Semiconductor is focused mainly on growth areas within the automotive and industrial markets. The company posted its strongest top-line expansion since 2017 last year and ON Semiconductor provided upbeat guidance when it beat our fourth quarter estimates in February. Some of ON Semiconductor's other fundamentals also help make the stock an enticing buy right now.
ON Basics
ON Semiconductor is one of the top semiconductor manufacturers with over 80,000 different parts that serve tens of thousands of customers across countless markets. ON, which was originally a spin-off of Motorola in the late 1990s, is focused on leading in the intelligent power and sensing technologies areas of the chip space, with a core focus on automotive and industrial end-markets right now.
ON Semiconductor's intelligent power and sensing technologies aim to help accelerate secular innovations such as electric vehicles, connected vehicle tech, industrial automation, sustainable energy grids, cloud infrastructure, and beyond.
To help give a sense of where its revenue is coming from, ON Semiconductor's automotive sector accounted for 33% of sales in Q2 FY21 (last time it provided this type of breakdown), with Industrial/Aero-Defense/Medical grabbing 26%. Meanwhile, Communications and Computing made up 15% each and its Consumer segment brought in 10%.
ON Semiconductor's adjusted fiscal 2021 earnings soared 250% on the back of 28% higher revenue that saw it pull in $6.7 billion. More specifically, its automotive segment climbed 36% and its industrial revenue increased 33%, with the growth driven by "automation, electrification, and advanced safety."
ON Semiconductor is also focused on boosting its margins and continuing to exit "low-margin noncore products." The firm's gross margin surged from 32.7% in FY20 to 40.3% last year. Plus, its free cash flow soared 167% YoY.
The company in November completed its purchase of GT Advanced Technologies. The firm is a key supplier of silicon carbide, a crucial component needed to manufacture electric vehicles, high-power industrial motors, chargers, and beyond. ON Semiconductor said on its earnings call that it expects its silicon carbide revenue to more than double in 2022.
Outlook
ON Semiconductor topped our fourth quarter earnings estimate by 16%, to bring its average beat to 21% in the trailing three periods. The company also provided strong upbeat EPS guidance despite global supply chain setbacks. ON's adjusted FY22 consensus EPS estimate has popped 27% since its Q4 release on February 7, with its 2023 estimate 37% higher. This bottom-line positivity also showed up for its current quarter and Q2 outlooks.
Zacks estimates call for ON Semiconductor's FY22 earnings to climb 41% to $4.16 a share, which would come on top of last year's massive jump. The firm's 2023 EPS is then set to pop 7% higher. Meanwhile, its revenue is projected to climb 14% in 2022 to $7.66 billion and another 5% in 2023.
Other Fundamentals
ON Semiconductor stock more than double the broader Zacks Technology Sector over the last 10 years, with it up 575%. This includes a big run off the covid lows, with ON having surged 615% in the past two years vs. its industry's 168% and tech's 90%. More recently, ON has managed to climb 26% during the last six months, while its peers moved sideways and the Zacks Tech Sector has dropped 14%.
Luckily for investors who might have missed out, ON Semiconductor has dropped 15% from its early January peaks of over $71 a share to hover around $60 at the moment. The stock's current Zacks consensus price target also marks 14% upside to its current levels.
Its industry and tech-topping run looks even better when diving into ON Semiconductor's valuation. ON trades at 14.3X forward 12-month earnings. This comes in near its five-year median of 13.4X and below where it was in early 2020 and parts of 2018. ON also trades at a 22% discount to its industry at the moment and 50% beneath its own highs during this stretch.
Bottom Line
ON Semiconductor's bottom-line revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now. The stock also grabs an "A" grade for Growth in our Style Scores system and its Semiconductor - Analog and Mixed industry sits in the top 7% of over 250 Zacks industries right now.
Wall Street is high on the stock, with 14 of the 20 brokerage recommendations Zacks has coming in at "Strong Buys." ON Semiconductor might not be the splashiest name in the chip space, but it's poised to grow by supplying key components to growth markets that are just getting started, including electric vehicles, advanced driver-assistance systems, new-age energy infrastructure, and beyond.
Meta Platforms formerly known as Facebook, tumbled after its fourth quarter financial release in early February. Wall Street dumped the stock because Apple's privacy policies are hurting the tech firm's mobile advertising-based business far more than previously projected.
The Name Change Says a Lot?
Facebook and CEO Mark Zuckerberg announced in October that the social media company that owns Instagram and WhatsApp was changing its name to Meta. Wall Street and investors appeared somewhat intrigued and slightly nervous about the firm's heavy investment in building out a massive immersive virtual reality experience and betting a large chunk of its future on the so-called metaverse.
Meta is pouring billions of dollars and tons of resources into the metaverse. The bet is that people will decide to live some of, or much of their lives in this new digital world via an avatar. That reality is still years off and it might not ever come to fruition, at least not how Zuckerberg and Meta hope.
In the here and now, Facebook, or Meta still makes nearly all of its money from traditional digital advertising, with a large chunk of that coming from mobile. Companies pay to put their ads in front of users across Facebook, Instagram, and WhatsApp, and for good reason.
Digital advertising is still a hugely lucrative business for Meta and a necessity for many companies, given that Meta closed fiscal 2021 with 2.82 billion "daily active people" on its family of platforms, up 8% YoY. Meanwhile, its "monthly active people" climbed 9% to 3.59 billion. These staggering figures helped Meta post 37% revenue growth last year to hit $118 billion.
The YoY growth is a bit misleading since 2020 marked its slowest top-line growth (22%) as a public firm. Meta then shocked Wall Street when it said Apple's iOS privacy policies that allow users to opt out of data tracking is likely to cost it more than $10 billion in lost sales in 2022. These policies have also hurt other social media firms such as Snap and they aren't going away.
Zacks estimates call for Meta's 2022 sales to climb just 12.3% and 17.4% in FY23, both of which would represent by far its lowest sales growth since its IPO—and likely ever. Meanwhile, its adjusted earnings are projected to slip 8.4% this year. And its FY22 Zacks consensus EPS is down 11% since its release, with FY23 over 7% lower.
Bottom Line
Meta is still a stellar company when considering its overall revenue and earnings power, impressive balance sheet, and ability to reach nearly half of the global population. Nonetheless, Wall Street is based on what's next and it faces growing competition from TikTok and others for people's attention.
Some of the big money is clearly nervous about Meta's slowing revenue growth and Apple's privacy push. Others might be skeptical about the long-term viability of the metaverse, or some combination of it all. FB shares have fallen 26% in the last year and 40% in 2022.
Meta's EPS revisions help it land a Zacks Rank #5 (Strong Sell) right now. Meta could, no doubt, make a comeback in the near and long term. But it is worth remembering the stock started lagging many of its big-tech peers such as Apple and Microsoft back in the early part of 2018.
Additional content:
GE Renewable Wins Wind Turbine Deal
General Electric Company's business unit, GE Renewable Energy, recently secured a contract from Iberdrola Australia for the delivery and installation of onshore wind turbines. The financial terms of the contract have been kept under wraps.
General Electric's share price gained 2.5% yesterday, eventually closing the trading session at $94.70.
Iberdrola Australia provides renewable energy solutions to households and industrial consumers in Australia. The company currently operates solar, wind and storage batteries with a capacity of more than 800 MW in the country. It also boasts a strong project portfolio, of which 453 MW are in the construction phase.
Inside the Headline
GE Renewable Energy will be responsible for supplying 38 units of its 3.8 MW wind turbines, carrying 137m of rotor diameter. The turbines will be set up at the Flyers Creek wind farm, which is under the development stage near Orange in New South Wales, Australia. The deal will likely help the 145.5 MW wind farm to generate sufficient power for 86,000 households, thus catering to the increasing demand for renewable and sustainable energy.
It's worth noting that the Flyers Creek wind farm project is expected to be completed in 2023, and General Electric will be responsible for providing operational services in the facility for 10 years.
The latest contract is a testimony to the growing popularity of General Electric's onshore wind turbine platform. Designed to operate at variable speeds, the company's 3.8 MW wind turbines feature a higher efficiency in service ability and an improved level of annual energy production, thus delivering significant value to its customers.
Zacks Rank, Price Performance and Estimate Trend
General Electric, with a $104.1-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from its portfolio-restructuring plans, expansion in the digital business, product innovation and efforts to deleverage the balance sheet in the quarters ahead. However, supply-chain constraints and inflationary pressure are likely to adversely impact GE's performance in the near term.
In the past three months, General Electric's share price has increased 5.2% against the industry's decline of 7.1%.
In the past 30 days, the Zacks Consensus Estimate for the company's 2022 earnings has decreased from $3.42 to $3.23, owing to four downward estimate revisions versus one upward. Also, the consensus estimate for its 2023 earnings has gone down from $5.05 to $5.03 due to three downward estimate revisions against two upward.
Griffon's earnings estimates increased 9% for fiscal 2022 (ending September 2022) in the past 30 days. GFF's shares have lost 9.8% in the past three months.
Franklin Electric Co., Inc. presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 17.4%, on average.
In the past 30 days, Franklin Electric's earnings estimates have been raised 10.9% for 2022. FELE's shares have lost 5% in the past three months.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and+95.3%. Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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ON Semiconductor and Meta Platforms have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – March 18, 2022 – Zacks Equity Research shares ON Semiconductor (ON - Free Report) as the Bull of the Day and Meta Platforms asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on General Electric Company's (GE - Free Report) , Griffon Corp. (GFF - Free Report) , and Franklin Electric Co., Inc. (FELE - Free Report)
Here is a synopsis of all five stocks:
Bull of the Day:
ON Semiconductor is focused mainly on growth areas within the automotive and industrial markets. The company posted its strongest top-line expansion since 2017 last year and ON Semiconductor provided upbeat guidance when it beat our fourth quarter estimates in February. Some of ON Semiconductor's other fundamentals also help make the stock an enticing buy right now.
ON Basics
ON Semiconductor is one of the top semiconductor manufacturers with over 80,000 different parts that serve tens of thousands of customers across countless markets. ON, which was originally a spin-off of Motorola in the late 1990s, is focused on leading in the intelligent power and sensing technologies areas of the chip space, with a core focus on automotive and industrial end-markets right now.
ON Semiconductor's intelligent power and sensing technologies aim to help accelerate secular innovations such as electric vehicles, connected vehicle tech, industrial automation, sustainable energy grids, cloud infrastructure, and beyond.
To help give a sense of where its revenue is coming from, ON Semiconductor's automotive sector accounted for 33% of sales in Q2 FY21 (last time it provided this type of breakdown), with Industrial/Aero-Defense/Medical grabbing 26%. Meanwhile, Communications and Computing made up 15% each and its Consumer segment brought in 10%.
ON Semiconductor's adjusted fiscal 2021 earnings soared 250% on the back of 28% higher revenue that saw it pull in $6.7 billion. More specifically, its automotive segment climbed 36% and its industrial revenue increased 33%, with the growth driven by "automation, electrification, and advanced safety."
ON Semiconductor is also focused on boosting its margins and continuing to exit "low-margin noncore products." The firm's gross margin surged from 32.7% in FY20 to 40.3% last year. Plus, its free cash flow soared 167% YoY.
The company in November completed its purchase of GT Advanced Technologies. The firm is a key supplier of silicon carbide, a crucial component needed to manufacture electric vehicles, high-power industrial motors, chargers, and beyond. ON Semiconductor said on its earnings call that it expects its silicon carbide revenue to more than double in 2022.
Outlook
ON Semiconductor topped our fourth quarter earnings estimate by 16%, to bring its average beat to 21% in the trailing three periods. The company also provided strong upbeat EPS guidance despite global supply chain setbacks. ON's adjusted FY22 consensus EPS estimate has popped 27% since its Q4 release on February 7, with its 2023 estimate 37% higher. This bottom-line positivity also showed up for its current quarter and Q2 outlooks.
Zacks estimates call for ON Semiconductor's FY22 earnings to climb 41% to $4.16 a share, which would come on top of last year's massive jump. The firm's 2023 EPS is then set to pop 7% higher. Meanwhile, its revenue is projected to climb 14% in 2022 to $7.66 billion and another 5% in 2023.
Other Fundamentals
ON Semiconductor stock more than double the broader Zacks Technology Sector over the last 10 years, with it up 575%. This includes a big run off the covid lows, with ON having surged 615% in the past two years vs. its industry's 168% and tech's 90%. More recently, ON has managed to climb 26% during the last six months, while its peers moved sideways and the Zacks Tech Sector has dropped 14%.
Luckily for investors who might have missed out, ON Semiconductor has dropped 15% from its early January peaks of over $71 a share to hover around $60 at the moment. The stock's current Zacks consensus price target also marks 14% upside to its current levels.
Its industry and tech-topping run looks even better when diving into ON Semiconductor's valuation. ON trades at 14.3X forward 12-month earnings. This comes in near its five-year median of 13.4X and below where it was in early 2020 and parts of 2018. ON also trades at a 22% discount to its industry at the moment and 50% beneath its own highs during this stretch.
Bottom Line
ON Semiconductor's bottom-line revisions activity helps it land a Zacks Rank #1 (Strong Buy) right now. The stock also grabs an "A" grade for Growth in our Style Scores system and its Semiconductor - Analog and Mixed industry sits in the top 7% of over 250 Zacks industries right now.
Wall Street is high on the stock, with 14 of the 20 brokerage recommendations Zacks has coming in at "Strong Buys." ON Semiconductor might not be the splashiest name in the chip space, but it's poised to grow by supplying key components to growth markets that are just getting started, including electric vehicles, advanced driver-assistance systems, new-age energy infrastructure, and beyond.
Bear of the Day:
Meta Platforms formerly known as Facebook, tumbled after its fourth quarter financial release in early February. Wall Street dumped the stock because Apple's privacy policies are hurting the tech firm's mobile advertising-based business far more than previously projected.
The Name Change Says a Lot?
Facebook and CEO Mark Zuckerberg announced in October that the social media company that owns Instagram and WhatsApp was changing its name to Meta. Wall Street and investors appeared somewhat intrigued and slightly nervous about the firm's heavy investment in building out a massive immersive virtual reality experience and betting a large chunk of its future on the so-called metaverse.
Meta is pouring billions of dollars and tons of resources into the metaverse. The bet is that people will decide to live some of, or much of their lives in this new digital world via an avatar. That reality is still years off and it might not ever come to fruition, at least not how Zuckerberg and Meta hope.
In the here and now, Facebook, or Meta still makes nearly all of its money from traditional digital advertising, with a large chunk of that coming from mobile. Companies pay to put their ads in front of users across Facebook, Instagram, and WhatsApp, and for good reason.
Digital advertising is still a hugely lucrative business for Meta and a necessity for many companies, given that Meta closed fiscal 2021 with 2.82 billion "daily active people" on its family of platforms, up 8% YoY. Meanwhile, its "monthly active people" climbed 9% to 3.59 billion. These staggering figures helped Meta post 37% revenue growth last year to hit $118 billion.
The YoY growth is a bit misleading since 2020 marked its slowest top-line growth (22%) as a public firm. Meta then shocked Wall Street when it said Apple's iOS privacy policies that allow users to opt out of data tracking is likely to cost it more than $10 billion in lost sales in 2022. These policies have also hurt other social media firms such as Snap and they aren't going away.
Zacks estimates call for Meta's 2022 sales to climb just 12.3% and 17.4% in FY23, both of which would represent by far its lowest sales growth since its IPO—and likely ever. Meanwhile, its adjusted earnings are projected to slip 8.4% this year. And its FY22 Zacks consensus EPS is down 11% since its release, with FY23 over 7% lower.
Bottom Line
Meta is still a stellar company when considering its overall revenue and earnings power, impressive balance sheet, and ability to reach nearly half of the global population. Nonetheless, Wall Street is based on what's next and it faces growing competition from TikTok and others for people's attention.
Some of the big money is clearly nervous about Meta's slowing revenue growth and Apple's privacy push. Others might be skeptical about the long-term viability of the metaverse, or some combination of it all. FB shares have fallen 26% in the last year and 40% in 2022.
Meta's EPS revisions help it land a Zacks Rank #5 (Strong Sell) right now. Meta could, no doubt, make a comeback in the near and long term. But it is worth remembering the stock started lagging many of its big-tech peers such as Apple and Microsoft back in the early part of 2018.
Additional content:
GE Renewable Wins Wind Turbine Deal
General Electric Company's business unit, GE Renewable Energy, recently secured a contract from Iberdrola Australia for the delivery and installation of onshore wind turbines. The financial terms of the contract have been kept under wraps.
General Electric's share price gained 2.5% yesterday, eventually closing the trading session at $94.70.
Iberdrola Australia provides renewable energy solutions to households and industrial consumers in Australia. The company currently operates solar, wind and storage batteries with a capacity of more than 800 MW in the country. It also boasts a strong project portfolio, of which 453 MW are in the construction phase.
Inside the Headline
GE Renewable Energy will be responsible for supplying 38 units of its 3.8 MW wind turbines, carrying 137m of rotor diameter. The turbines will be set up at the Flyers Creek wind farm, which is under the development stage near Orange in New South Wales, Australia. The deal will likely help the 145.5 MW wind farm to generate sufficient power for 86,000 households, thus catering to the increasing demand for renewable and sustainable energy.
It's worth noting that the Flyers Creek wind farm project is expected to be completed in 2023, and General Electric will be responsible for providing operational services in the facility for 10 years.
The latest contract is a testimony to the growing popularity of General Electric's onshore wind turbine platform. Designed to operate at variable speeds, the company's 3.8 MW wind turbines feature a higher efficiency in service ability and an improved level of annual energy production, thus delivering significant value to its customers.
Zacks Rank, Price Performance and Estimate Trend
General Electric, with a $104.1-billion market capitalization, currently carries a Zacks Rank #3 (Hold). The company is poised to benefit from its portfolio-restructuring plans, expansion in the digital business, product innovation and efforts to deleverage the balance sheet in the quarters ahead. However, supply-chain constraints and inflationary pressure are likely to adversely impact GE's performance in the near term.
In the past three months, General Electric's share price has increased 5.2% against the industry's decline of 7.1%.
In the past 30 days, the Zacks Consensus Estimate for the company's 2022 earnings has decreased from $3.42 to $3.23, owing to four downward estimate revisions versus one upward. Also, the consensus estimate for its 2023 earnings has gone down from $5.05 to $5.03 due to three downward estimate revisions against two upward.
Stocks to Consider
Some better-ranked companies are discussed below.
Griffon Corp. presently sports a Zacks Rank #1 (Strong Buy). It delivered a four-quarter earnings surprise of 56.7%, on average. You can see the complete list of today's Zacks #1 Rank stocks here.
Griffon's earnings estimates increased 9% for fiscal 2022 (ending September 2022) in the past 30 days. GFF's shares have lost 9.8% in the past three months.
Franklin Electric Co., Inc. presently has a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 17.4%, on average.
In the past 30 days, Franklin Electric's earnings estimates have been raised 10.9% for 2022. FELE's shares have lost 5% in the past three months.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and+95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.