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Deciphering ON Semiconductor Corp. (ON) International Revenue Trends

Have you assessed how the international operations of ON Semiconductor Corp. (ON) performed in the quarter ended March 2024? For this semiconductor components maker, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.

In today's increasingly interconnected global economy, a company's ability to tap into international markets can be a pivotal factor in shaping its overall financial health and growth trajectory. For investors, understanding a company's reliance on overseas markets has become increasingly crucial, as it offers insights into the company's sustainability of earnings, ability to tap into diverse economic cycles and overall growth potential.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

While analyzing ON's performance for the last quarter, we found some intriguing trends in revenues from its overseas segments that Wall Street analysts commonly model and monitor.

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For the quarter, the company's total revenue amounted to $1.86 billion, experiencing a decline of 5% year over year. Next, we'll explore the breakdown of ON's international revenue to understand the importance of its overseas business operations.

A Dive into ON's International Revenue Trends

During the quarter, Singapore contributed $433.2 million in revenue, making up 23.3% of the total revenue. When compared to the consensus estimate of $434.51 million, this meant a surprise of -0.3%. Looking back, Singapore contributed $462 million, or 22.9%, in the previous quarter, and $450.7 million, or 23%, in the same quarter of the previous year.

Of the total revenue, $444 million came from United Kingdom during the last fiscal quarter, accounting for 23.8%. This represented a surprise of +12.96% as analysts had expected the region to contribute $393.07 million to the total revenue. In comparison, the region contributed $426.6 million, or 21.1%, and $413.3 million, or 21.1%, to total revenue in the previous and year-ago quarters, respectively.

Hong Kong accounted for 21.8% of the company's total revenue during the quarter, translating to $405.4 million. Revenues from this region represented a surprise of -16.6%, with Wall Street analysts collectively expecting $486.08 million. When compared to the preceding quarter and the same quarter in the previous year, Hong Kong contributed $566.1 million (28.1%) and $490.4 million (25%) to the total revenue, respectively.

International Revenue Predictions

The current fiscal quarter's total revenue for ON Semiconductor Corp. as projected by Wall Street analysts, is expected to reach $1.73 billion, reflecting a decline of 17.3% from the same quarter last year. The breakdown of this revenue by foreign region is as follows: Singapore is anticipated to contribute 24.8% or $430 million, United Kingdom 22.4% or $387.69 million and Hong Kong 28% or $484.25 million.

Analysts expect the company to report a total annual revenue of $7.25 billion for the full year, marking a decrease of 12.2% compared to last year. The expected revenue contributions from Singapore, United Kingdom and Hong Kong are projected to be 24.3% ($1.76 billion), 22% ($1.6 billion) and 27.7% ($2 billion) of the total revenue, in that order.

Final Thoughts

ON Semiconductor Corp.'s reliance on international markets for revenues offers both opportunities and risks. Hence, keeping an eye on its international revenue trends could significantly help forecast the company's prospects.

In an era of growing international ties and escalating geopolitical disputes, financial analysts on Wall Street pay keen attention to these developments to fine-tune their earnings estimations for businesses operating across borders. It's important to note, however, that a range of additional variables, like a company's local market status, also play a crucial role in shaping these forecasts.

Emphasizing a company's shifting earnings prospects is a key aspect of our approach at Zacks, especially since research has proven its substantial influence on a stock's price in the short run. This correlation is positively aligned, meaning that improved earnings projections tend to boost the stock's price.

The Zacks Rank, our proprietary stock rating mechanism, demonstrates a notable performance history confirmed through external audits. It effectively utilizes the power of earnings estimate revisions to act as a predictor of a stock's price performance in the near term.

Currently, ON Semiconductor Corp. holds a Zacks Rank #3 (Hold), signifying its potential to match the overall market's performance in the forthcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Examining the Latest Trends in ON Semiconductor Corp.'s Stock Value

The stock has increased by 1.5% over the past month compared to the 1.6% fall of the Zacks S&P 500 composite. Meanwhile, the Zacks Computer and Technology sector, which includes ON Semiconductor Corp. has decreased 0.7% during this time frame. Over the past three months, the company's shares have experienced a loss of 12.9% relative to the S&P 500's 3.8% increase. Throughout this period, the sector overall has witnessed a 4.2% increase.

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