Onto Innovation (ONTO) AI Stock Analysis

• Market Cap: $5.44B
• Dividend Yield: N/A
• Average Volume (3M): 1.32M
• Price to Earnings (P/E): 27.5
• Beta (1Y): 2.26
• Revenue Growth: 15.51%
• EPS Growth: 20.31%
• Country: US
• Employees: 1,551
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 1.25
• Shares Outstanding: 49,003,570
• 10 Day Avg. Volume: 1,094,801
• 30 Day Avg. Volume: 1,317,941
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.73
• Enterprise Value/Revenue: 3.83
• Enterprise Value/Gross Profit: 7.46
• Enterprise Value/Ebitda: 14.58
• 1Y Price Target: $123.86
• Price Target Upside: 6.44% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 76 Outperform
• Price Target: $117.00 ▲(0.54% Upside)

Onto Innovation's strong financial performance and positive earnings call outlook are the primary drivers of its stock score. The company's robust balance sheet and strategic acquisitions position it well for future growth. However, technical indicators suggest caution, and the valuation is moderate, which tempers the overall score.

Positive Factors

Strong Financial Health

Onto Innovation's low leverage and high equity ratios indicate robust financial stability, reducing financial risk and enhancing its capacity to invest in growth opportunities.

Strategic Acquisition

The acquisition is expected to add over $130 million in annual revenue and increase EPS by more than 10%, strengthening Onto Innovation's market position and product offerings.

Revenue Growth

Consistent revenue growth and strong operating margins demonstrate the company's effective market strategies and product demand, supporting long-term financial performance.

Negative Factors

Free Cash Flow Decline

A decline in free cash flow growth could limit Onto Innovation's ability to fund new projects or return capital to shareholders, potentially impacting future financial flexibility.

Gross Margin Pressure

Tariff impacts on gross margins could reduce profitability, affecting the company's ability to maintain competitive pricing and invest in growth initiatives.

Operating Margin Decline

A temporary decline in operating margins due to lower revenue may indicate cost pressures and efficiency challenges, potentially affecting short-term profitability.

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 primarily through the sale of its semiconductor equipment and related services. The company's revenue model is built on several key streams: equipment sales, which include metrology and inspection systems; service contracts that provide maintenance and support for their products; and software solutions that enhance the performance of semiconductor manufacturing processes. Additionally, partnerships with major semiconductor manufacturers and collaborations with research institutions contribute to Onto's earnings by expanding its market reach and facilitating innovation. The company also benefits from industry trends towards increased demand for advanced semiconductor technologies, which drives sales growth.

Onto Innovation Financial Statement Overview

Summary

Onto Innovation demonstrates strong financial health with stable revenue growth, robust profitability margins, and efficient cash flow management. The balance sheet reflects a low leverage position, providing a solid foundation for future growth, although there may be potential to leverage debt more effectively for further expansion.

Income Statement

Onto Innovation shows strong profitability with a consistent increase in total revenue and net income over the years. The TTM gross profit margin is 51.48% and the net profit margin stands at 21.37%, indicating efficient cost management and strong profit generation. EBIT and EBITDA margins are also healthy at 20.37% and 24.84% respectively. Revenue growth rate from the previous annual report to TTM is 3.82%, showing a steady upward trend.

Balance Sheet

The company maintains a solid financial position with a low debt-to-equity ratio of 0.01 and a strong equity ratio of 90.77%, reflecting financial stability and low leverage. Return on equity (ROE) is robust at 11.40%, demonstrating effective utilization of equity. However, the high equity ratio might indicate underutilization of debt financing for growth opportunities.

Cash Flow

Onto Innovation exhibits strong cash flow management with a healthy operating cash flow to net income ratio of 1.28 and free cash flow to net income ratio of 1.13, suggesting efficient conversion of income into cash. The free cash flow growth rate from the previous year is 15.72%, highlighting robust cash generation capabilities.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.04B	987.32M	815.87M	1.01B	788.90M	556.50M
Gross Profit	531.57M	515.31M	420.25M	539.22M	429.09M	278.45M
EBITDA	272.03M	249.41M	183.29M	301.38M	222.21M	94.25M
Net Income	199.87M	201.67M	121.16M	223.33M	142.35M	31.02M
Balance Sheet
Total Assets	2.14B	2.12B	1.91B	1.79B	1.65B	1.47B
Cash, Cash Equivalents and Short-Term Investments	894.94M	852.33M	697.81M	547.78M	511.34M	373.72M
Total Debt	13.41M	15.16M	19.52M	22.02M	17.72M	20.93M
Total Liabilities	177.00M	191.21M	173.18M	198.44M	223.76M	203.43M
Stockholders Equity	1.96B	1.93B	1.74B	1.60B	1.43B	1.26B
Cash Flow
Free Cash Flow	238.49M	213.77M	149.40M	118.30M	163.24M	102.16M
Operating Cash Flow	273.17M	245.68M	171.97M	136.70M	175.28M	105.98M
Investing Cash Flow	-125.47M	-226.55M	-103.39M	-55.69M	-141.79M	-48.60M
Financing Cash Flow	-104.95M	-35.67M	-9.47M	-68.35M	2.67M	-53.70M

Onto Innovation Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 116.37
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ONTO, the sentiment is Positive. The current price of 116.37 is above the 20-day moving average (MA) of 106.93, above the 50-day MA of 102.93, and below the 200-day MA of 131.92, indicating a neutral trend. The MACD of 1.87 indicates Negative momentum. The RSI at 69.00 is Neutral, neither overbought nor oversold. The STOCH value of 84.06 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ONTO.

Onto Innovation Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVMI	81 Outperform	8.82B	40.92	19.81%	―	43.69%	51.22%
CAMT	77 Outperform	4.19B	32.36	21.58%	1.52%	27.88%	37.85%
ONTO	76 Outperform	$5.44B	27.47	10.53%	―	15.51%	20.31%
AMKR	76 Outperform	6.35B	20.95	7.24%	2.87%	-1.20%	-19.46%
SMTC	65 Neutral	5.43B	265.27	4.30%	―	22.22%	0.00%
ALGM	53 Neutral	5.53B	-81.32	-7.43%	―	-18.82%	-195.20%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%