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STMicroelectronics in Brief

STMicroelectronics shares fell by -3.0% during the day's afternoon session, and are now trading at a price of $41.33. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.

STMicroelectronics Is Potentially Undervalued and Priced Fairly:

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company belongs to the Technology sector, which has an average price to earnings (P/E) ratio of 35.0 and an average price to book (P/B) ratio of 7.92. In contrast, STMicroelectronics has a trailing 12 month P/E ratio of 9.3 and a P/B ratio of 2.18.

STMicroelectronics's PEG ratio is 3.33, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Exceptional EPS Growth but Slimmer Gross Margins than the Industry Average of 54.23%:

2018 2019 2020 2021 2022 2023
Revenue (M) $9,664 $9,556 $10,219 $12,761 $16,128 $17,286
Gross Margins 40% 39% 37% 42% 47% 48%
Net Margins 13% 11% 11% 16% 25% 24%
Net Income (M) $1,287 $1,032 $1,106 $2,000 $3,960 $4,211
Net Interest Expense (M) -$7 $1 -$20 -$29 $58 $171
Depreciation & Amort. (M) $791 $854 $923 $1,045 $1,216 $1,561
Diluted Shares (M) 911 904 920 925 946 944
Earnings Per Share $1.41 $1.14 $1.2 $2.16 $4.19 $4.46
EPS Growth n/a -19.15% 5.26% 80.0% 93.98% 6.44%
Free Cash Flow (M) $1,845 $1,869 $2,093 $3,060 $5,202 $5,992
Total Debt (M) $2,056 $2,245 $3,416 $2,682 $2,892 $3,144
Net Debt / EBITDA -0.1 -0.17 0.18 -0.16 -0.06 -0.01
Current Ratio 2.76 3.03 2.49 2.65 2.56 3.17

STMicroelectronics has exceptional EPS growth and generally positive cash flows. Additionally, the company's financial statements display an excellent current ratio of 3.17 and healthy leverage levels. However, the firm has slimmer gross margins than its peers.

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.

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