STMicroelectronics (STM) AI Stock Analysis

• Market Cap: $24.06B
• Dividend Yield: 1.16%
• Average Volume (3M): 7.70M
• Price to Earnings (P/E): 38.3
• Beta (1Y): 1.57
• Revenue Growth: -22.97%
• EPS Growth: -78.58%
• Country: US
• Employees: 49,602
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): -0.11
• Shares Outstanding: 902,771,060
• 10 Day Avg. Volume: 5,412,056
• 30 Day Avg. Volume: 7,704,643
• 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: 1.03
• Enterprise Value/Revenue: 2.08
• Enterprise Value/Gross Profit: 5.81
• Enterprise Value/Ebitda: 10.40
• 1Y Price Target: $31.64
• Price Target Upside: 20.44% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 66 Neutral
• Price Target: $28.00 ▲(6.59% Upside)

STMicroelectronics' robust financial structure and strategic initiatives for growth are offset by current revenue declines and margin pressures. Technical indicators suggest weak momentum, and the valuation appears high. The mixed earnings call results add uncertainty but also highlight potential for future growth.

Positive Factors

Foundry Agreement

Management said it does not expect any material adverse impact on revenue from the company’s recent foundry agreement with TSMC, as it sounds as if they are providing ASIC service and some IP for the platform, a positive as investors had feared ST would lose business here.

Geographic Market Strength

China remains the strongest end market geography for STMicroelectronics.

Market Position

POP/POS data continue to trend positively for industrial and auto revenues are largely shipping to end demand.

Negative Factors

Automotive Revenue

Automotive revenue is impacted by weak EV demand and competition in China.

Gross Margin Concerns

Stagnant and FX-impacted GM% is likely a sticking point.

Tesla Impact

Recent cuts at Tesla are weighing on results and its second-half outlook.

STMicroelectronics Business Overview & Revenue Model

Company Description

STMicroelectronics N.V., together with its subsidiaries, designs, develops, manufactures, and sells semiconductor products in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through Automotive and Discrete Group; Analog, MEMS and Sensors Group; and Microcontrollers and Digital ICs Group segments. The Automotive and Discrete Group segment offers automotive integrated circuits (ICs), and discrete and power transistor products. The Analog, MEMS and Sensors Group segment provides industrial application-specific integrated circuits (ASICs) and application-specific standard products (ASSPs); general purpose analog products; custom analog ICs; wireless charging solutions; galvanic isolated gate drivers; low and high voltage amplifiers, comparators, and current-sense amplifiers; MasterGaN, a solution that integrates a silicon driver and GaN power transistors in a single package; wireline and wireless connectivity ICs; touch screen controllers; micro-electro-mechanical systems (MEMS) products, including sensors or actuators; and optical sensing solutions. The Microcontrollers and Digital ICs Group segment offers general purpose and secure microcontrollers; and radio frequency (RF) products. It also offers application-specific standard products for analog, digital and mixed-signal applications. In addition, the company provides assembly and other services. It sells its products through distributors and retailers, as well as through sales representatives. The company serves automotive, industrial, personal electronics and communications equipment, and computers and peripherals markets. STMicroelectronics N.V. was incorporated in 1987 and is headquartered in Schiphol, the Netherlands.

How the Company Makes Money

STMicroelectronics generates revenue primarily through the sale of semiconductor products across multiple sectors. Key revenue streams include sales of integrated circuits, microcontrollers, and sensors, which are utilized in consumer electronics, automotive applications, and industrial automation. STM benefits from strategic partnerships with major technology companies and OEMs, allowing it to integrate its products into a wide range of applications. Additionally, the company's investment in research and development enables it to innovate and capture emerging market opportunities, particularly in IoT and electric vehicle technologies. Fluctuations in demand for electronics and advancements in technology significantly influence STM's earnings.

STMicroelectronics Financial Statement Overview

Summary

STMicroelectronics presents a robust financial structure with effective leverage management and operational efficiency. However, the recent decline in revenue and moderate profitability ratios highlight the need for strategic initiatives to boost growth and improve returns on equity.

Income Statement

STMicroelectronics shows solid profitability with a TTM gross profit margin of 35.8% and net profit margin of 5.5%. However, there is a noticeable decline in revenue compared to the previous year, signaling potential challenges in revenue growth. The EBIT and EBITDA margins, at 6.3% and 20.0% respectively, highlight operational efficiency but also suggest room for improvement in cost management.

Balance Sheet

The company maintains a healthy balance sheet with a low debt-to-equity ratio of 0.17, indicating conservative leverage. The equity ratio of 69.7% reflects strong asset backing. ROE stands at 3.7%, which is lower than industry expectations, suggesting that profitability from equity could be enhanced.

Cash Flow

STMicroelectronics' cash flow position is stable, with positive operating cash flow to net income ratio of 3.6, demonstrating efficient cash generation from operations. The free cash flow growth is positive, although relatively small, indicating careful capital expenditure management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	11.89B	13.27B	17.29B	16.13B	12.76B	10.22B
Gross Profit	4.26B	5.22B	8.29B	7.33B	5.05B	3.40B
EBITDA	2.38B	3.72B	6.38B	6.40B	3.61B	2.27B
Net Income	649.73M	1.56B	4.21B	3.96B	2.00B	694.00M
Balance Sheet
Total Assets	25.46B	24.74B	24.45B	19.98B	15.54B	14.45B
Cash, Cash Equivalents and Short-Term Investments	5.63B	6.18B	6.08B	4.52B	3.52B	3.72B
Total Debt	2.96B	3.17B	3.17B	2.91B	2.74B	2.82B
Total Liabilities	7.48B	7.06B	7.60B	7.22B	6.27B	5.95B
Stockholders Equity	17.75B	17.45B	16.73B	12.69B	9.21B	8.45B
Cash Flow
Free Cash Flow	45.80M	-216.00M	1.46B	2.05B	1.19B	804.00M
Operating Cash Flow	2.34B	2.96B	5.99B	5.58B	3.46B	2.46B
Investing Cash Flow	-3.00B	-3.74B	-5.71B	-4.98B	-1.86B	-2.34B
Financing Cash Flow	-796.05M	-155.00M	-267.00M	-556.00M	-1.37B	279.00M

STMicroelectronics Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 26.27
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 26.27 is above the 20-day moving average (MA) of 26.11, below the 50-day MA of 28.46, and above the 200-day MA of 25.53, indicating a neutral trend. The MACD of -0.20 indicates Negative momentum. The RSI at 44.68 is Neutral, neither overbought nor oversold. The STOCH value of 59.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STM.

STMicroelectronics Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UMC	72 Outperform	$16.59B	13.28	10.98%	7.30%	5.46%	-26.72%
ON	69 Neutral	$20.28B	46.27	5.72%	―	-17.93%	-75.83%
ASX	67 Neutral	$21.42B	20.20	10.97%	3.46%	4.86%	6.44%
STM	66 Neutral	$24.06B	38.30	3.72%	1.16%	-22.97%	-78.58%
Sector *	61 Neutral	$35.45B	8.20	-10.60%	1.91%	8.56%	-9.51%
MTSI	58 Neutral	$9.54B	138.48	-5.96%	―	33.50%	-197.38%
GFS	54 Neutral	$18.46B	28.15	-1.01%	―	-0.65%	-114.26%