Onto Innovation (ONTO) AI Stock Analysis

• Market Cap: $5.41B
• Dividend Yield: N/A
• Average Volume (3M): 1.01M
• Price to Earnings (P/E): 25.7
• Beta (1Y): 2.21
• Revenue Growth: 21.01%
• EPS Growth: 65.27%
• Country: US
• Employees: 1,551
• Sector: Technology
• Sector Strength: 40
• Industry: Semiconductors
• EPS (TTM): 4.06
• Shares Outstanding: 49,270,256
• 10 Day Avg. Volume: 859,165
• 30 Day Avg. Volume: 1,013,783
• PEG Ratio: 0.39
• Price to Book (P/B): N/A
• Price to Sales (P/S): 6.77
• Price to Cash Flow (P/CF): 29.80
• P/FCF Ratio: 29.80
• 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: $233.33
• Price Target Upside: 123.41% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

Onto Innovation is positioned well financially, with strong revenue growth and a robust balance sheet. The earnings call provided a positive outlook with significant growth in key markets and improved margins. However, technical indicators suggest current bearish momentum, and the high P/E ratio raises valuation concerns. Despite these challenges, the company's overall growth trajectory and market expansion underpin a favorable outlook.

Positive Factors

Financial Performance

Onto’s 4Q24 non-GAAP earnings of $1.51 per diluted share were $0.10 above investor expectations.

Sales Growth

AI Packaging sales grew 180% year over year.

Negative Factors

NAND Market Decline

Management sees upsides in AI packaging, strong growth in GAA and DRAM, offset by a decline in NAND into 4Q24.

Supply Constraints

ONTO missed estimates due to either customer pushout or supply constraints of litho systems.

Onto Innovation Business Overview & Revenue Model

Company Description

Onto Innovation Inc. engages in the design, development, manufacture, and support of process control tools that performs macro defect inspection and 2D/3D optical metrology, lithography systems, and process control analytical software worldwide. It offers process and yield management solutions, and device packaging and test facilities through standalone systems for macro-defect inspection, packaging lithography, probe card test and analysis, and transparent and opaque thin film measurements; and process control software portfolio that includes solutions for standalone tools, groups of tools, and enterprise-or factory-wide suites. The company also provides spare parts and software licensing services. Its products are used by semiconductor and advanced packaging device manufacturers; silicon wafer; light emitting diode; vertical-cavity surface-emitting laser; micro-electromechanical system; CMOS image sensor; power device; RF filter; data storage; and various industrial and scientific applications. The company was formerly known as Rudolph Technologies, Inc. Onto Innovation Inc. was founded in 1940 and is headquartered in Wilmington, Massachusetts.

How the Company Makes Money

Onto Innovation generates revenue through the sale of its advanced process control systems and related services to semiconductor manufacturers and other high-tech industries. Key revenue streams include the sales of metrology and inspection equipment, which are essential for ensuring quality and precision in semiconductor fabrication. Additionally, Onto Innovation offers software solutions that provide data analysis and insights, enhancing the efficiency of manufacturing processes. The company also earns revenue from service contracts and support agreements, providing maintenance and upgrades for its equipment. Partnerships with leading semiconductor firms and ongoing innovation in product offerings significantly contribute to Onto Innovation's earnings.

Onto Innovation Financial Statement Overview

Summary

Onto Innovation demonstrates strong financial health with impressive revenue growth of 21%, high profitability with gross margins of 52.2%, and a solid balance sheet with no debt. The return on equity is effective at 10.5%, and cash flow generation is robust despite capital expenditure impacts. Overall, the company is well-positioned for future growth, showing minimal financial risk.

Income Statement

Onto Innovation's income statement reflects strong profitability with a gross profit margin of 52.2% and a net profit margin of 20.4% in the latest annual report. Revenue grew by 21% year-over-year, indicating strong demand and market position. However, the EBIT margin of 18.9% suggests room for operational efficiency improvements.

Balance Sheet

The balance sheet is robust, with a debt-to-equity ratio of 0.00, indicating no reliance on debt financing. The company maintains a strong equity ratio of 91.0%, reflecting financial stability and low leverage. The return on equity stands at 10.5%, showing effective use of shareholder funds.

Cash Flow

Cash flow analysis reveals a healthy free cash flow growth of 43.1% year-over-year. The operating cash flow to net income ratio of 1.2 indicates solid cash generation relative to earnings. However, lower free cash flow to net income ratio of 1.1 suggests capital expenditures are impacting free cash flow.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Mar 2022	Dec 2020
Income Statement		Total Revenue
987.32M	815.87M	1.01B	788.90M	556.50M
	Gross Profit
515.31M	420.25M	539.22M	429.09M	278.45M
	EBIT
187.10M	116.08M	236.71M	156.41M	26.68M
	EBITDA
187.10M	183.29M	301.38M	222.21M	94.25M
	Net Income Common Stockholders
201.67M	121.16M	223.33M	142.35M	31.02M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
852.33M	697.81M	547.78M	511.34M	373.72M
	Total Assets
2.12B	1.91B	1.79B	1.65B	1.47B
	Total Debt
15.16M	19.52M	22.02M	17.72M	20.93M
	Net Debt
-197.79M	-213.99M	-153.85M	-151.88M	-115.80M
	Total Liabilities
191.21M	173.18M	198.44M	223.76M	203.43M
	Stockholders Equity
1.93B	1.74B	1.60B	1.43B	1.26B
Cash Flow		Free Cash Flow
213.77M	149.40M	118.30M	163.24M	102.16M
	Operating Cash Flow
245.68M	171.97M	136.70M	175.28M	105.98M
	Investing Cash Flow
-226.55M	-103.39M	-55.69M	-141.79M	-48.60M
	Financing Cash Flow
-35.67M	-9.47M	-68.35M	2.67M	-53.70M

Onto Innovation Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 104.44
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ONTO, the sentiment is Negative. The current price of 104.44 is below the 20-day moving average (MA) of 129.34, below the 50-day MA of 155.15, and below the 200-day MA of 184.66, indicating a bearish trend. The MACD of -8.75 indicates Negative momentum. The RSI at 32.94 is Neutral, neither overbought nor oversold. The STOCH value of 17.59 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ONTO.

Onto Innovation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAMT	76 Outperform	$2.31B	20.87	23.12%	2.63%	36.10%	48.15%
NVMI	73 Outperform	$4.74B	28.37	21.90%	―	29.83%	33.42%
ONTO	70 Outperform	$5.41B	25.72	11.01%	―	21.01%	65.27%
ALGM	70 Outperform	$3.93B	―	-6.32%	―	-28.33%	-129.75%
Sector *	57 Neutral	$18.57B	9.42	-13.42%	2.72%	5.01%	-23.43%
SLAB	53 Neutral	$2.99B	―	-16.69%	―	-25.29%	-449.44%
IPGP	52 Neutral	$2.22B	―	-8.18%	―	-24.10%	-189.99%

Onto Innovation Corporate Events

Onto Innovation Announces Senior VP Resignation

On April 1, 2025, Dr. Srinivas Vedula informed Onto Innovation Inc. of his resignation as Senior Vice President, Customer Success, effective April 8, 2025, to pursue other opportunities. His departure was not due to any disagreements with the company regarding its operations, policies, or practices.