Understanding Why ON Semiconductor Stock Is Sliding Today.

With a sudden -3.1% drop to $93.83, ON Semiconductor has Wall Street wondering if its shares will keep moving past its target price of $96.42. With an average rating of buy, and analysts assigning target prices from 80.0 to 110.0 dollars per share, investors will be betting heavily on the Semiconductors stock's next move.

We can use ON Semiconductor's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since ON's short interest is 9.5%, the market sentiment is mixed on this stock.

Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.

Another way to gauge the sentiment on ON Semiconductor is to look at the percentage of institutions that are invested in the stock. In this case, 102.2% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.

If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.

To sum up, ON Semiconductor is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a buy rating, an above average percentage of its shares sold short, and a significant number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.

Here's a snapshot of some important facts to keep in mind about ON:

  • The stock has trailing 12 month earnings per share (EPS) of $4.3

  • ON Semiconductor has a trailing 12 month Price to Earnings (P/E) ratio of 21.8 compared to the S&P 500 average of 15.97

  • The company has a Price to Book (P/B) ratio of 6.28 in contrast to the S&P 500's average ratio of 2.95

  • ON Semiconductor is a Technology company, and the sector average P/E and P/B ratios are 27.16 and 6.23 respectively

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.