Renesas Electronics (RNECF) AI Stock Analysis

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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 (RNECF) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$23.50B

Dividend Yield1.4%

Average Volume (3M)26.29K

Price to Earnings (P/E)21.7

Beta (1Y)1.95

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees21,204

SectorTechnology

Sector Strength83

IndustrySemiconductors

Share Statistics

EPS (TTM)0.10

Shares Outstanding1,870,614,900

10 Day Avg. Volume10,843

30 Day Avg. Volume26,287

Financial Highlights & Ratios

PEG Ratio-0.77

Price to Book (P/B)1.36

Price to Sales (P/S)0.00

P/FCF Ratio14.53

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$18.37

Price Target Upside39.80% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

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 Money

Renesas Electronics Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: 6.31%|

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

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

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

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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 Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RNECF		$23.50B	21.72	7.22%	1.40%	―	―
Sector *	62 Neutral	$11.81B	10.34	-7.44%	2.91%	7.41%	-7.93%
ADTTF		$40.40B	38.56	34.01%	0.47%	―	―
DINRF		$7.29B	11.27	24.78%	2.69%	―	―
DISPF		$24.08B	29.85	27.22%	1.22%	―	―
LSRCF		$9.06B	19.86	44.53%	1.74%	―	―
TOELF		$75.77B	20.20	29.69%	2.50%	―	―

* Technology Sector Average

Performance Comparison

RNECF

Renesas Electronics

13.14

-5.58

-29.81%

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%

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.