ON Semiconductor scores 82 for management and 41 for moat. The management score rests on a return on invested capital of 0.7% and a gross margin of 33.1% — figures that describe a business turning capital into profit efficiently. Debt sits at 0.45x equity. A moderate moat alongside exceptional management is a combination worth understanding before the price matters at all.
The valuation runs on assumptions chosen to understate rather than flatter. Growth is modelled at 2.7% a year, below the 3.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 8.0x. That produces an intrinsic value of $4.02, a 10-CAP price of $39.61 and a payback time price of $35.74, with the value zone set at the highest of the three, $39.61. Today's price of $80.08 is 102% above it.
The price is above the value zone and the business scores 41 for moat and 82 for management. Neither test argues for paying up here.
| Price | $80.08 |
| Market cap | $31.2B |
| P/E ratio | 51.3x |
| Return on invested capital | 0.7% |
| Gross margin | 33.1% |
| Debt to equity | 0.45x |
| Free cash flow yield | 6.4% |
| Growth rate used | 2.7% |
| Growth rate measured | 3.0% |
| Exit multiple assumed | 8.0x |
| Company | Moat | Buy price |
| Qnity Electronics, Inc. (Q) | 19 | $44.14 |
| Entegris Inc (ENTG) | 58 | $55.70 |
| Semtech Corp (SMTC) | 27 | $25.69 |
| Skyworks Solutions (SWKS) | 26 | $18.62 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of ON Semiconductor rather than accepting ours.