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STMicroelectronics (STM)
NYSE:STM
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STMicroelectronics
(NYSE:STM)
71Outperform
Positive Factors
Growth Ambitions
ST has ambitions to grow its auto MCU franchise and enter the AI server business in silicon photonics and stage 2 power.
Strategic Partnerships
ST is excited about its direct relationships with Auto OEMs, particularly in its MCU franchise, allowing insight into design win volumes.
Negative Factors
Inventory Challenges
The biggest culprit and cyclical headwind is excess inventory and weak demand in industrial in particular.
Market Exposure
Heavy exposure to the EU and limited exposure to China exacerbates aggregate market weakness.
Revenue and Margin Pressures
Near-term revenue/margins are likely to remain muted, with others better positioned to benefit from the eventual upcycle.
STMicroelectronics (STM) vs. S&P 500 (SPY)
Market Cap
$16.73B
Dividend Yield1.65%
Average Volume (3M)7.44M
Price to Earnings (P/E)11.2
Beta (1Y)1.60
Revenue Growth-23.24%
EPS Growth-62.93%
CountryUS
Employees49,602
SectorTechnology
Sector Strength40
IndustrySemiconductors
Share Statistics
EPS (TTM)1.66
Shares Outstanding902,771,060
10 Day Avg. Volume7,744,972
30 Day Avg. Volume7,443,999
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.63
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$25.93Price Target Upside40.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
STMicroelectronics Business Overview & Revenue Model
Company DescriptionSTMicroelectronics (STM) is a global leader in the semiconductor industry, specializing in providing products and solutions for a wide range of electronics applications. The company operates in various sectors, including automotive, industrial, personal electronics, and communications equipment. Its core products encompass microcontrollers, sensors, power management devices, and analog ICs, which are integral to the functioning of modern electronic systems.
How the Company Makes MoneySTMicroelectronics generates revenue through the design, manufacture, and sale of semiconductor products. The company's revenue streams are primarily derived from its diverse product portfolio, catering to multiple sectors such as automotive, industrial, and personal electronics. STM's microcontrollers and digital ICs are widely used in automotive and industrial applications, while its sensors and power management solutions are integral to consumer electronics. Additionally, STM benefits from strategic partnerships and collaborations with leading technology companies, which enhance its market reach and innovation capabilities. The company's extensive R&D efforts and its ability to deliver cutting-edge technology solutions play a crucial role in maintaining its competitive edge and driving revenue growth.
STMicroelectronics Financial Statement Overview
Summary
STMicroelectronics demonstrates strong revenue and profit margins, reflecting its operational efficiency. However, challenges such as declining revenue from 2023 to 2024 and high capital expenditures impacting free cash flow are evident. The balance sheet remains strong with a solid equity base, though increased leverage requires monitoring.Income Statement
STMicroelectronics has demonstrated robust revenue growth over the years, although there was a decline from 2023 to 2024. The gross profit margin remained strong at 39.34% in 2024, despite a decrease from previous years. The net profit margin in 2024 was healthy at 11.74%, although it showed a downward trend compared to 2023. The company maintained strong EBIT and EBITDA margins of 12.63% and 28.06% respectively in 2024, reflecting efficient operational management.85
Very Positive
Balance Sheet
The balance sheet of STMicroelectronics is characterized by a solid equity base with an equity ratio of 70.52% in 2024. However, the debt-to-equity ratio increased to 0.18, indicating a slight rise in leverage. The return on equity (ROE) was 8.92% in 2024, which is below the previous year's performance, suggesting a potential area for improvement.78
Positive
Cash Flow
The cash flow statement shows a concerning negative free cash flow in 2024, primarily due to high capital expenditures. The operating cash flow to net income ratio was strong at 1.90, indicating good cash generation relative to net income. However, the free cash flow to net income ratio was negative, highlighting the impact of substantial investments on cash reserves.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 13.27B | 17.29B | 16.13B | 12.76B | 10.22B | Gross Profit |
| 5.22B | 8.29B | 7.33B | 5.05B | 3.40B | EBIT |
| 1.68B | 4.61B | 4.53B | 2.45B | 1.23B | EBITDA |
| 3.72B | 6.38B | 6.40B | 3.61B | 2.27B | Net Income Common Stockholders |
| 1.56B | 4.21B | 3.96B | 2.00B | 694.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 6.18B | 6.08B | 4.59B | 3.52B | 3.85B | Total Assets |
| 24.74B | 24.45B | 20.99B | 16.41B | 15.31B | Total Debt |
| 3.17B | 3.17B | 2.57B | 2.53B | 2.62B | Net Debt |
| 885.00M | -49.00M | -686.00M | -691.00M | -389.00M | Total Liabilities |
| 7.06B | 7.60B | 7.48B | 6.83B | 7.00B | Stockholders Equity |
| 17.45B | 16.73B | 13.44B | 9.52B | 8.25B |
| Cash Flow | Free Cash Flow | |||
| -216.00M | 1.46B | 2.05B | 1.19B | 804.00M | Operating Cash Flow |
| 2.96B | 5.99B | 5.58B | 3.46B | 2.46B | Investing Cash Flow |
| -3.74B | -5.71B | -4.98B | -1.86B | -2.34B | Financing Cash Flow |
| -155.00M | -267.00M | -556.00M | -1.37B | 279.00M |
STMicroelectronics Technical Analysis
Negative
18.49
Price Trends
24.03
Negative
24.69
Negative
28.29
Negative
Market Momentum
-0.70
Positive
33.65
Neutral
9.68
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STM, the sentiment is Negative. The current price of 18.49 is below the 20-day moving average (MA) of 23.38, below the 50-day MA of 24.03, and below the 200-day MA of 28.29, indicating a bearish trend. The MACD of -0.70 indicates Positive momentum. The RSI at 33.65 is Neutral, neither overbought nor oversold. The STOCH value of 9.68 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STM.
STMicroelectronics Risk Analysis
STMicroelectronics disclosed 33 risk factors in its most recent earnings report. STMicroelectronics reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
STMicroelectronics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $17.09B | 10.54 | 12.65% | 5.62% | 1.28% | -25.42% | |
71 Outperform | $16.73B | 11.16 | 9.12% | 1.65% | -23.24% | -62.93% | |
68 Neutral | $19.51B | 16.38 | 10.32% | 3.00% | -0.62% | -1.08% | |
68 Neutral | $19.48B | 63.87 | 4.71% | 5.01% | -44.31% | -86.74% | |
67 Neutral | $14.20B | 9.28 | 18.97% | ― | -14.19% | -27.42% | |
57 Neutral | $18.54B | 9.84 | -14.38% | 2.71% | 5.07% | -23.65% | |
54 Neutral | $17.44B | 28.15 | -2.42% | ― | -8.69% | -125.98% |
* Technology Sector Average
Performance Comparison
STM
STMicroelectronics
18.49
-23.32
-55.78%
ASX
ASE Technology Holding Co
7.67
-3.04
-28.38%
MCHP
Microchip
36.22
-50.77
-58.36%
ON
ON Semiconductor
33.70
-35.05
-50.98%
UMC
United Micro
6.23
-1.62
-20.64%
GFS
GlobalFoundries Inc
31.54
-18.72
-37.25%
STMicroelectronics Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -25.02% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Negative
STMicroelectronics faced a challenging FY2024 with significant declines in revenue, profitability, and market demand, particularly in the industrial and automotive sectors. While there were strategic advancements in silicon carbide, sustainability, and new product introductions, the company continues to grapple with inventory challenges and underutilization charges. The sentiment reflects a cautious outlook with plans for strategic manufacturing and cost-saving initiatives to restore growth and profitability.Highlights
Growth in Silicon Carbide Engagement
STMicroelectronics reported strong momentum in silicon carbide design-in activities, particularly in China, with more engagement with top Chinese carmakers than any other suppliers. Revenue for silicon carbide products reached $1.1 billion for the year.
Strategic Manufacturing Initiatives
The company announced the construction of a new high-volume 200-millimeter silicon carbide manufacturing facility in Catania, Italy, and reported the launch of a program to accelerate wafer fab capacity to 300-mm silicon and 200-mm silicon carbide.
Sustainability Achievements
STMicroelectronics is on track to be carbon-neutral by 2027 and reached agreements for renewable energy use in Italy, Malaysia, and France.
New Product Introductions
Introduced new silicon carbide MOSFET technology, STM32N6 MCU series, and innovative smart sensors with edge AI processing for industrial applications.
Lowlights
Significant Revenue Decline
Net revenues for FY2024 decreased 23.2% to $13.27 billion, with a notable decline in industrial and automotive markets.
Decreased Profitability
Gross margin dropped to 39.3% from 47.9% in 2023, and operating margin fell to 12.6% from 26.7% in 2023. Net income decreased by 63% to $1.56 billion.
Inventory Challenges
Faced delayed recovery and inventory correction, particularly in Europe, with Automotive and Industrial markets showing a book-to-bill ratio below one.
Underutilization Charges Impact
Unfavorable product mix and higher unused capacity charges contributed to a decrease in gross margin, with significant underutilization expected to continue in Q1 2025.
Automotive Visibility Concerns
Automotive market visibility remains low, with a shift in orders coming with only two to three weeks' visibility.
Company Guidance
During the STMicroelectronics full-year 2024 earnings call, the company provided a detailed financial overview, highlighting several key metrics. For the fourth quarter, net revenues were $3.32 billion, decreasing 22.4% year-over-year but increasing 2.2% sequentially, with a gross margin of 37.7% and an operating margin of 11.1%. Net income for Q4 was $341 million. For the full-year 2024, net revenues decreased 23.2% to $13.27 billion, with gross and operating margins of 39.3% and 12.6%, respectively, and a net income decline of 63% to $1.56 billion. The company invested $2.53 billion in net capital expenditures and generated $288 million in free cash flow. The guidance for Q1 2025 expects revenues of $2.51 billion with a gross margin of about 33.8%. The company plans to invest $2 billion to $2.3 billion in net CapEx for 2025. STMicroelectronics also reported on business dynamics, highlighting challenges in the automotive sector and inventory corrections in industrial, with strategic shifts aimed at long-term growth in silicon carbide and microcontrollers.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.