Renesas Electronics (6723) AI Stock Analysis

• Market Cap: $3.38T
• Dividend Yield: 1.48%
• Average Volume (3M): 14.09M
• Price to Earnings (P/E): 20.6
• Beta (1Y): 1.45
• Revenue Growth: -10.70%
• EPS Growth: -47.63%
• Country: JP
• Employees: 21,204
• Sector: Technology
• Sector Strength: 87
• Industry: Semiconductors
• EPS (TTM): 14.48
• Shares Outstanding: 1,870,614,900
• 10 Day Avg. Volume: 19,026,040
• 30 Day Avg. Volume: 14,090,540
• PEG Ratio: 0.08
• Price to Book (P/B): 1.44
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.64
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $2,510.50
• Price Target Upside: 32.51% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 71 Outperform
• Price Target: ¥2,102.00 ▲(10.95%Upside)

Renesas Electronics' overall score reflects its strong financial performance, with solid profitability and cash flow management. However, technical indicators and earnings call insights reveal challenges such as revenue decline and tariff uncertainties, slightly tempering the outlook. The valuation is fair, providing a balanced investment case.

Positive Factors

Growth in Automotive Segment

The automotive segment experienced a 10.3% y/y increase in revenue, showing strong performance in this area.

Strategic Vision and Goals

Renesas has ambitious goals for 2030, aiming to become a top 3 embedded semiconductor solution provider, achieve 20x revenue growth, and increase corporate value sixfold.

Negative Factors

Demand Recovery and Competition Risks

Renesas faces risks from potential slower-than-expected demand recovery, particularly in the automotive sector, and intense competition from global players.

Earnings Decline

3Q24 EBITDA declined by 31.1% y/y, driven by a 9% revenue drop, falling short of expectations.

Inventory and Demand Challenges

Elevated inventory levels and weaker end demand have resulted in a delayed recovery.

Renesas Electronics Business Overview & Revenue Model

Company Description

Renesas Electronics Corporation is a global leader in the semiconductor industry, headquartered in Tokyo, Japan. The company specializes in the design and manufacturing of microcontrollers, system-on-chip (SoC) solutions, and a wide array of analog and power devices. Renesas serves a diverse range of sectors including automotive, industrial, infrastructure, and the Internet of Things (IoT), providing cutting-edge solutions that enhance the performance, efficiency, and connectivity of electronic devices.

How the Company Makes Money

Renesas Electronics generates revenue primarily through the sale of its semiconductor products, which are crucial components in a variety of electronic devices. The company's key revenue streams include microcontrollers, which are widely used in automotive and industrial applications, and analog and power devices that are essential for power management and connectivity in electronic systems. Renesas also benefits from strategic partnerships and collaborations that expand its market reach and enhance its product offerings. Additionally, the company invests in research and development to innovate and maintain a competitive edge in the fast-evolving technology landscape.

Renesas Electronics Financial Statement Overview

Summary

Renesas Electronics shows strong financial health with robust profitability, efficient cash flow management, and moderate leverage. Despite a revenue decline, the company's solid margins and effective asset utilization indicate sound financial practices.

Income Statement

Renesas Electronics demonstrates solid profitability with a robust gross profit margin of 48.1% and a net profit margin of 12.9% TTM. However, the revenue growth rate shows a decline of 10.4% from the previous year, indicating potential challenges in maintaining growth momentum. The company shows strong operational efficiency with an EBIT margin of 14.4% and EBITDA margin of 31.8%.

Balance Sheet

The company maintains a healthy equity base with a debt-to-equity ratio of 0.59, showcasing moderate leverage. The return on equity (ROE) is a commendable 7.3% TTM, indicating effective utilization of shareholder funds. The equity ratio of 55.2% reflects strong financial stability and asset management.

Cash Flow

Renesas Electronics shows strong cash flow management with a free cash flow growth rate of 3.4% TTM. The operating cash flow to net income ratio is 2.1, indicating efficient conversion of income to cash. The free cash flow to net income ratio of 1.3 supports the company's ability to generate cash beyond its net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.31T	1.35T	1.47T	1.50T	994.42B	715.67B
Gross Profit	628.17B	749.80B	723.55B	853.99B	496.40B	335.69B
EBITDA	415.61B	433.70B	589.90B	559.70B	299.85B	214.29B
Net Income	168.19B	219.08B	337.09B	256.62B	119.54B	45.63B
Balance Sheet
Total Assets	4.20T	4.49T	3.17T	2.81T	2.41T	1.61T
Cash, Cash Equivalents and Short-Term Investments	177.60B	238.49B	434.68B	342.76B	222.66B	220.39B
Total Debt	1.36T	1.40T	667.66B	755.74B	814.09B	679.74B
Total Liabilities	1.87T	1.95T	1.16T	1.27T	1.24T	989.32B
Stockholders Equity	2.32T	2.54T	2.00T	1.53T	1.16T	616.70B
Cash Flow
Free Cash Flow	217.69B	210.59B	367.50B	391.13B	255.04B	185.70B
Operating Cash Flow	359.97B	340.48B	496.63B	479.32B	307.38B	223.89B
Investing Cash Flow	-1.21T	-1.28T	-267.49B	-97.52B	-663.13B	-40.16B
Financing Cash Flow	801.09B	677.35B	-181.25B	-294.77B	340.92B	-104.47B

Renesas Electronics Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1894.50
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6723, the sentiment is Positive. The current price of 1894.5 is above the 20-day moving average (MA) of 1885.97, above the 50-day MA of 1822.19, and below the 200-day MA of 2019.30, indicating a neutral trend. The MACD of 1.13 indicates Positive momentum. The RSI at 53.25 is Neutral, neither overbought nor oversold. The STOCH value of 54.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6723.

Renesas Electronics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
7735	82 Outperform	$1.17T	11.77	24.78%	2.71%	23.84%	38.09%
8035	81 Outperform	$12.52T	22.88	29.69%	2.25%	32.83%	50.73%
6857	80 Outperform	$7.77T	48.15	34.01%	0.38%	60.27%	158.92%
6146	73 Outperform	¥4.49T	36.26	27.22%	1.18%	27.88%	47.09%
6920	73 Outperform	$1.68T	23.95	44.53%	1.85%	-2.37%	4.89%
6723	71 Outperform	$3.38T	20.63	7.22%	1.48%	-10.70%	-47.63%
Sector *	69 Neutral	¥228.59B	14.33	7.64%	2.71%	9.13%	8.49%

Renesas Electronics Corporate Events

Renesas Electronics Faces Financial Loss Amid Wolfspeed Restructuring

Renesas Electronics has entered into a Restructuring Support Agreement with Wolfspeed, Inc. to address Wolfspeed’s financial challenges, converting a $2.062 billion deposit into convertible notes, common stock, and warrants. This move is expected to result in a significant loss for Renesas, estimated at approximately 250 billion yen, impacting its financial statements for the first half of 2025, but it aims to strengthen its position in the semiconductor industry by acquiring a substantial stake in Wolfspeed.

The most recent analyst rating on (JP:6723) stock is a Buy with a Yen2700.00 price target. To see the full list of analyst forecasts on Renesas Electronics stock, see the JP:6723 Stock Forecast page.

Renesas Electronics Reports Decline in Q1 2025 Financial Results

Renesas Electronics reported a significant decline in its financial performance for the first quarter ended March 31, 2025, with a 12.2% decrease in revenue compared to the previous year. The company’s operating profit and profit before tax also saw substantial drops of 72.3% and 70.8%, respectively. This downturn reflects challenges in the semiconductor market, impacting Renesas’ profitability and market positioning. Despite these challenges, the company maintains its dividend forecast and continues to adjust its accounting estimates to better align with current market conditions.

Renesas Electronics Releases First Half 2025 Financial Forecasts Amid Market Volatility

Renesas Electronics announced its consolidated financial forecasts for the first half of 2025, highlighting the challenges of predicting full-year results due to semiconductor market volatility. The company provided non-GAAP figures to better reflect ongoing business performance, projecting revenue between 603,277 and 618,277 million yen, with gross and operating margins of 55.9% and 26.1% respectively. This forecast indicates a decrease compared to the same period in the previous year, reflecting market conditions and currency fluctuations, which may impact stakeholders and the company’s market positioning.