Renesas Electronics (6723) AI Stock Analysis

• Market Cap: ¥3.45T
• Dividend Yield: 1.44%
• Average Volume (3M): 13.02M
• Price to Earnings (P/E): 21.0
• Beta (1Y): 1.54
• Revenue Growth: -10.70%
• EPS Growth: -47.63%
• Country: JP
• Employees: 21,204
• Sector: Technology
• Sector Strength: 84
• Industry: Semiconductors
• EPS (TTM): 14.48
• Shares Outstanding: 1,870,614,900
• 10 Day Avg. Volume: 12,452,190
• 30 Day Avg. Volume: 13,015,639
• 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: ¥2,654.09
• Price Target Upside: 34.11% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 74 Outperform
• Price Target: ¥2,044.00 ▲(3.28%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.

Market Position

Renesas is a leading supplier of high-performance and power-efficient microcontrollers (MCUs) across automotive, industrial, IoT, and infrastructure markets.

Strategic 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

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

Financial Performance

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

Inventory Levels

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

Renesas Electronics Business Overview & Revenue Model

Company Description

Renesas 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 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
	EBIT
188.18B	222.32B	368.31B	424.17B	183.60B	65.14B
	EBITDA
415.61B	433.70B	589.90B	559.70B	299.85B	214.29B
	Net Income Common Stockholders
168.19B	219.08B	337.09B	256.62B	119.54B	45.63B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
177.60B	238.49B	434.68B	342.76B	222.66B	220.39B
	Total Assets
4.20T	4.49T	3.17T	2.81T	2.41T	1.61T
	Total Debt
1.36T	1.40T	667.66B	755.74B	814.09B	679.74B
	Net Debt
1.18T	1.17T	232.98B	419.68B	592.16B	459.96B
	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: 1979.00
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 1979 is above the 20-day moving average (MA) of 1819.37, above the 50-day MA of 1756.69, and below the 200-day MA of 2062.25, indicating a neutral trend. The MACD of 33.34 indicates Negative momentum. The RSI at 62.89 is Neutral, neither overbought nor oversold. The STOCH value of 84.35 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6723	74 Outperform	¥3.45T	21.04	7.22%	1.44%	-10.70%	-47.63%
Sector *	62 Neutral	$11.93B	10.60	-7.51%	3.00%	7.40%	-8.09%
ADTTF		$42.56B	38.97	34.01%	0.48%	―	―
DINRF		$7.19B	11.07	24.78%	2.76%	―	―
DISPF		$24.92B	30.60	27.22%	0.01%	―	―
LSRCF		$9.26B	19.62	44.53%	<0.01%	―	―
TOELF		$76.32B	20.59	29.69%	2.46%	―	―

Renesas Electronics Corporate Events

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.

Renesas Electronics Strengthens Corporate Governance for Sustainable Growth

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.