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Renesas Electronics Corporation (JP:6723)
:6723

Renesas Electronics (6723) AI Stock Analysis

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JP

Renesas Electronics

(OTC:6723)

Rating:74Outperform
Price Target:
¥2,044.00
▲(6.96%Upside)
Renesas Electronics receives a solid score, driven primarily by its strong financial health and reasonable valuation. The technical analysis indicates some short-term challenges, while the earnings call highlights both growth opportunities and potential risks.
Positive Factors
Automotive Growth
The automotive segment experienced a 10.3% y/y increase in revenue, showing strong performance in this area.
Strategic Ambitions
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
Earnings Decline
3Q24 EBITDA declined by 31.1% y/y, driven by a 9% revenue drop, falling short of expectations.
Inventory Challenges
Elevated inventory levels and weaker end demand have resulted in a delayed recovery.

Renesas Electronics (6723) vs. iShares MSCI Japan ETF (EWJ)

Renesas Electronics Business Overview & Revenue Model

Company DescriptionRenesas Electronics Corporation researches, develops, designs, manufactures, sells, and services semiconductors in Japan, China, North America, Europe, rest of Asia, and internationally. The company operates through Automotive Business and Industrial/Infrastructure/IoT Business segments. It offers microcontrollers (MCUs) and microprocessors; amplifiers, audio and video, data converters, power line communication, and switches and multiplexer products; battery and power management, power devices, sensors, video and display, wireless power, system-on-chips, and MCU products; and specific clocks, clock distribution and generation, jitter attenuators, and crystal oscillator clock ICs and clock timing solutions. The company also provides buffers, wireless modules, data compression, industrial Ethernet, IO-link line driver, memory interface, optical interconnect, photocouplers/optocouplers, power line communication, signal integrity, telecom datacom and interface, USB switches and hubs, and wireless communications products. In addition, it offers bus switches, first-in, first-out, memory interface, legacy memory interface, multi-port and SRAM memory, and standard logic products; and battery management, DC converters and power modules, discrete power devices, linear regulators, MOSFET and motor drivers, multi-channel power management ICs, USB type-C and power delivery, and wireless power. Further, the company provides modulators and demodulators, transistor arrays, and variable gain amplifiers, as well as RF amplifiers, attenuators, mixers, and synthesizers; and environmental, flow, light and proximity, position, biosensors, and temperature sensor products, as well as senor signal conditioners products. It serves automotive, communication and computing infrastructure, consumer electronics, industrial, Internet of Things, medical and healthcare, and power and energy industries. The company was incorporated in 2002 and is headquartered in Tokyo, Japan.
How the Company Makes MoneyRenesas 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 Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: 17.49%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with steady growth in certain segments like Data Center and AI, and completion of inventory correction. However, significant challenges remain due to revenue decline, tariff uncertainties, and decreased operating profit margin. The company remains cautious with a focus on long-term competitiveness amid uncertain market conditions.
Q1-2025 Updates
Positive Updates
Steady Growth in Data Center and AI Segments
Despite uncertainties, steady growth is expected in the Data Center and AI segments, especially for the second half with the DDR5 generation upgrade progressing.
Inventory Correction Completed
Inventory correction was nearly completed in Q1, with some gradual recovery observed.
Gross Margin Improvement
Gross margin improved by 2.7% due to better product mix and cost savings, with some unexpected benefits from cost reductions.
Positive Outlook for IIoT
IIoT segment showed a positive outlook with a 5.3% increase in device revenue excluding FX impact, mainly contributing to growth.
Automotive Segment Developments
Launch of the 28-nano MCU is expected to be strong, particularly in China, with robust adoption in EV, ADAS, and powertrain areas.
Negative Updates
Revenue Decline Year-on-Year
Overall, there was a 12.2% decrease in revenue year-on-year, with a minus 16.8% when exchange impact is excluded.
Tariff Uncertainties
Tariff impacts are uncertain and could affect volumes and ASP negatively, leading to a conservative outlook.
Decreased Operating Profit Margin
Operating profit margin decreased due to increased R&D expenses and exchange impacts.
Challenges in Automotive Segment
Automotive operating margin decreased Q-on-Q, with uncertainties in demand and strategic changes among customers.
CapEx and Utilization Rate Concerns
CapEx continues with stronger control over expenditures and overall utilization rates expected to be flat amid factory adjustments.
Company Guidance
In the recent earnings call, Renesas Electronics Corporation provided guidance for the second quarter of FY 2025, highlighting several key metrics. The company reported a first-quarter revenue of JPY 308.8 billion, with a gross margin of 56.7% and an operating profit of JPY 83.8 million. The operating margin stood at 27.9%, and core net profit was JPY 73.3 billion. EBITDA for the quarter was JPY 103.5 million. In terms of currency, the yen was JPY 154 against the dollar and JPY 161 against the euro. Looking ahead, Renesas forecasted second-quarter revenue at JPY 302.0 billion, with a gross margin of 55.0% and an operating profit margin of 25%. The company remains cautious due to ongoing uncertainties around tariffs, which could impact both direct and indirect business operations. Despite these challenges, Renesas anticipates steady growth in sectors such as data centers and AI, particularly with the progression of DDR5 upgrades in the second half of the year.

Renesas Electronics Financial Statement Overview

Summary
Renesas Electronics demonstrates strong financial health with robust profitability, efficient cash flow management, and moderate leverage. Despite challenges in revenue growth, solid margins and effective asset utilization underscore sound financial practices.
Income Statement
80
Positive
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
75
Positive
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
85
Very Positive
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
1.31T1.35T1.47T1.50T994.42B715.67B
Gross Profit
628.17B749.80B723.55B853.99B496.40B335.69B
EBIT
188.18B222.32B368.31B424.17B183.60B65.14B
EBITDA
415.61B433.70B589.90B559.70B299.85B214.29B
Net Income Common Stockholders
168.19B219.08B337.09B256.62B119.54B45.63B
Balance SheetCash, Cash Equivalents and Short-Term Investments
177.60B238.49B434.68B342.76B222.66B220.39B
Total Assets
4.20T4.49T3.17T2.81T2.41T1.61T
Total Debt
1.36T1.40T667.66B755.74B814.09B679.74B
Net Debt
1.18T1.17T232.98B419.68B592.16B459.96B
Total Liabilities
1.87T1.95T1.16T1.27T1.24T989.32B
Stockholders Equity
2.32T2.54T2.00T1.53T1.16T616.70B
Cash FlowFree Cash Flow
217.69B210.59B367.50B391.13B255.04B185.70B
Operating Cash Flow
359.97B340.48B496.63B479.32B307.38B223.89B
Investing Cash Flow
-1.21T-1.28T-267.49B-97.52B-663.13B-40.16B
Financing Cash Flow
801.09B677.35B-181.25B-294.77B340.92B-104.47B

Renesas Electronics Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1911.00
Price Trends
50DMA
1778.17
Positive
100DMA
2035.52
Negative
200DMA
2066.16
Negative
Market Momentum
MACD
10.54
Negative
RSI
58.88
Neutral
STOCH
82.09
Negative
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 1911 is above the 20-day moving average (MA) of 1810.50, above the 50-day MA of 1778.17, and below the 200-day MA of 2066.16, indicating a neutral trend. The MACD of 10.54 indicates Negative momentum. The RSI at 58.88 is Neutral, neither overbought nor oversold. The STOCH value of 82.09 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6723.

Renesas Electronics Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$3.40T20.727.22%1.40%-10.70%-47.63%
62
Neutral
$11.80B10.37-7.29%2.91%7.39%-7.96%
$40.40B38.5634.01%0.47%
$7.27B11.2724.78%2.69%
$24.08B29.8527.22%1.22%
$9.04B19.8644.53%1.74%
$75.77B20.2029.69%2.50%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
JP:6723
Renesas Electronics
1,911.00
-1,027.82
-34.97%
ADTTF
Advantest
55.31
21.44
63.30%
DINRF
SCREEN Holdings Co
75.66
-17.26
-18.58%
DISPF
Disco
223.83
-150.48
-40.20%
LSRCF
Lasertec
101.24
-133.91
-56.95%
TOELF
Tokyo Electron
156.68
-57.40
-26.81%

Renesas Electronics Corporate Events

Renesas Electronics Reports Decline in Q1 2025 Financial Results
Apr 24, 2025

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
Apr 24, 2025

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.

Renesas Electronics Strengthens Corporate Governance for Sustainable Growth
Mar 26, 2025

Renesas Electronics Corporation has reaffirmed its commitment to robust corporate governance, emphasizing transparency, agility, and innovation as core elements of its corporate culture. The company aims to maintain a sustainable future by enhancing its corporate governance structure to ensure transparent, fair, and decisive decision-making, thereby solidifying its position in the competitive semiconductor market.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.