STMicroelectronics (STM) AI Stock Analysis

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STMicroelectronics

(NYSE:STM)

70Outperform

STMicroelectronics faces significant challenges with declining revenues and profitability, as highlighted in the recent earnings call. While the company maintains strong profitability margins and a robust balance sheet, these strengths are offset by the current operational struggles and inventory issues. Technical indicators show moderate strength, but valuation suggests limited upside potential in the short term. Overall, the stock is fairly rated given the mixed outlook.

Positive Factors

China Strategy

There is increasing optimism about the company's China-for-China strategy.

Cyclical Recovery

Management is incrementally more confident in a cyclical recovery.

Market Share Stability

The company's market share at its largest SiC customer has now stabilized at the contractual rate, indicating no incremental share loss going forward.

Negative Factors

Geopolitical and Margin Headwinds

There are concerns about customer inventory draw down, company-specific margin headwinds, and an unpredictable geopolitical backdrop.

Inventory Challenges

Distributor inventories remain elevated, internal inventories are at a historical high.

Tariff Concerns

The company noted tariffs are clouding the demand environment.

STMicroelectronics (STM) vs. S&P 500 (SPY)

Market Cap

$23.11B

Dividend Yield1.18%

Average Volume (3M)7.89M

Price to Earnings (P/E)22.0

Beta (1Y)1.68

Revenue Growth-25.35%

EPS Growth-70.00%

CountryUS

Employees49,602

SectorTechnology

Sector Strength77

IndustrySemiconductors

Share Statistics

EPS (TTM)0.07

Shares Outstanding902,771,060

10 Day Avg. Volume5,447,450

30 Day Avg. Volume7,894,090

Financial Highlights & Ratios

PEG Ratio-0.67

Price to Book (P/B)1.22

Price to Sales (P/S)0.00

P/FCF Ratio87.97

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$25.80

Price Target Upside-0.27% Downside

Rating ConsensusModerate Buy

Number of Analyst Covering7

STMicroelectronics Business Overview & Revenue Model

Company DescriptionSTMicroelectronics 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 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 solid profitability and balance sheet stability, characteristic of a strong semiconductor company. Despite recent revenue and free cash flow declines, the company sustains good profit margins and low leverage. The financial position is supported by robust equity and manageable debt levels, though attention to revenue growth and free cash flow improvements will be crucial moving forward.

Income Statement

Positive

STMicroelectronics shows strong profitability with a consistent gross profit margin of 37.5% in TTM. However, there is a noticeable decline in revenue from $13.269B in 2024 to $12.322B in TTM, indicating a revenue growth rate of -7.14%. The net profit margin stands at 8.93% for TTM, reflecting effective cost management. Despite the revenue decline, profitability metrics such as EBIT margin at 8.88% and EBITDA margin at 23.39% remain robust, underscoring operational efficiency.

Balance Sheet

Very Positive

The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.16, indicating low leverage. The equity ratio is strong at 71.1%, showing that a significant portion of assets is financed by equity. Return on equity (ROE) is solid at 6.21%, reflecting effective use of equity capital. The balance sheet stability is a strong point for STMicroelectronics, allowing for potential growth opportunities.

Cash Flow

Positive

Cash flow analysis highlights a challenging environment with a decrease in free cash flow from $1.456B in 2023 to $235M in TTM, marking substantial volatility. The operating cash flow to net income ratio is 2.43, which indicates strong cash generation capability relative to net income. However, the free cash flow to net income ratio is only 0.21, suggesting limited free cash generation relative to net income, posing a potential risk if this trend continues.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
12.32B	13.27B	17.29B	16.13B	12.76B	10.22B
	Gross Profit
4.62B	5.22B	8.29B	7.33B	5.05B	3.40B
	EBIT
1.09B	1.68B	4.61B	4.53B	2.45B	1.23B
	EBITDA
2.88B	3.72B	6.38B	6.40B	3.61B	2.27B
	Net Income Common Stockholders
1.10B	1.56B	4.21B	3.96B	2.00B	694.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.96B	6.18B	6.08B	4.59B	3.52B	3.85B
	Total Assets
24.92B	24.74B	24.45B	20.99B	16.41B	15.31B
	Total Debt
2.88B	3.17B	3.17B	2.57B	2.53B	2.62B
	Net Debt
1.10B	885.00M	-49.00M	-686.00M	-691.00M	-389.00M
	Total Liabilities
6.96B	7.06B	7.60B	7.48B	6.83B	7.00B
	Stockholders Equity
17.73B	17.45B	16.73B	13.44B	9.52B	8.25B
Cash Flow		Free Cash Flow
235.00M	-216.00M	1.46B	2.05B	1.19B	804.00M
	Operating Cash Flow
2.68B	2.96B	5.99B	5.58B	3.46B	2.46B
	Investing Cash Flow
-3.28B	-3.74B	-5.71B	-4.98B	-1.86B	-2.34B
	Financing Cash Flow
-745.00M	-155.00M	-267.00M	-556.00M	-1.37B	279.00M

STMicroelectronics Technical Analysis

Technical Analysis Sentiment

Positive

Last Price25.87

Price Trends

50DMA

22.85

Positive

100DMA

23.78

Positive

200DMA

25.72

Positive

Market Momentum

MACD

1.05

Negative

RSI

66.55

Neutral

STOCH

87.63

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STM, the sentiment is Positive. The current price of 25.87 is above the 20-day moving average (MA) of 24.01, above the 50-day MA of 22.85, and above the 200-day MA of 25.72, indicating a bullish trend. The MACD of 1.05 indicates Negative momentum. The RSI at 66.55 is Neutral, neither overbought nor oversold. The STOCH value of 87.63 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UMC	79 Outperform	$19.87B	14.25	11.65%	4.42%	2.22%	-22.39%
STM	70 Outperform	$23.11B	22.01	6.33%	1.18%	-25.35%	-70.00%
ASX	70 Outperform	$20.51B	20.18	11.47%	2.33%	1.32%	4.86%
MCHP	66 Neutral	$32.58B	84.25	>-0.01%	3.00%	-44.31%	-86.74%
ON	65 Neutral	$18.32B	30.41	7.85%	―	-18.28%	-70.98%
GFS	63 Neutral	$21.64B	28.15	-1.69%	―	-4.42%	-120.96%
Sector *	60 Neutral	$11.59B	10.34	-7.15%	2.94%	7.49%	-10.88%

* Technology Sector Average

Performance Comparison

STM

STMicroelectronics

25.87

-14.65

-36.15%

ASX

ASE Technology Holding Co

9.91

-0.73

-6.86%

MCHP

Microchip

60.80

-33.10

-35.25%

ON Semiconductor

44.26

-28.56

-39.22%

UMC

United Micro

7.85

-0.30

-3.68%

GFS

GlobalFoundries Inc

39.12

-15.72

-28.67%

STMicroelectronics Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: 18.78%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Negative

The earnings call highlighted STMicroelectronics' innovative strides in microcontrollers and personal electronics, as well as positive developments in sustainability. However, these positives are overshadowed by significant revenue declines, challenges in the automotive sector, high inventory levels, and substantial drops in operating margins and net income.

Q1-2025 Updates

Positive Updates

Positive Book-to-Bill Ratios

The company reported a book-to-bill ratio above one for both the automotive and industrial sectors, indicating potential growth in these areas.

Innovations in Automotive Microcontrollers

Notable progress in automotive microcontrollers with the introduction of new products set to launch in 2025 and 2026, which are expected to drive revenue growth.

Strong Performance in Personal Electronics

The personal electronics segment performed slightly better than expected, with innovative advancements in MEMS, optical sensing, and analog technology.

Leadership in General-Purpose Microcontrollers

The STM32 microcontrollers maintained a number one ranking in the general-purpose microcontroller market, with a market share that has consistently grown.

Sustainability Efforts

STMicroelectronics issued its first annual integrated report and is on track to achieve carbon neutrality by 2027.

Negative Updates

Significant Revenue Decline

On a year-over-year basis, Q1 net revenues decreased 27.3% to $2.52 billion, and the gross margin decreased to 33.4% from 41.7%.

Automotive Revenue Challenges

The automotive segment saw lower revenues across all geographies, with a decline of about 39% year-over-year, and full-year revenues expected to decline.

High Inventory Levels

Inventory at the end of Q1 was $3.01 billion, with days of sales of inventory at 167 days, indicating slow inventory turnover.

Operating Margin Decline

Operating margin decreased to 0.1% from 15.9% year-over-year, reflecting significant challenges in maintaining profitability.

Net Income Drop

Net income decreased 89.1% to $50 million, a substantial drop indicating financial struggles.

Economic Uncertainty and Tariff Concerns

Uncertainty around global trade tariffs and the economic environment is impacting the company's outlook and planning.

Company Guidance

During the STMicroelectronics Q1 2025 earnings call, the company reported a 27.3% year-over-year decrease in net revenues to $2.52 billion, with a gross margin reduction from 41.7% to 33.4%. Operating margin dropped significantly from 15.9% to 0.1%, and net income fell 89.1% to $50 million. The automotive segment experienced lower revenues, but the company maintained a book-to-bill ratio above one, indicating future growth potential. STMicroelectronics also highlighted the progress in its automotive microcontroller portfolio, with strong design momentum in regions like China, EMEA, and the Americas. The company continues to focus on reshaping its manufacturing footprint, targeting $2 billion to $2.3 billion in CapEx for 2025 to enhance its 300-millimeter silicon and 200-millimeter silicon carbide capabilities. Despite market uncertainties, STMicroelectronics remains committed to its medium-term growth drivers, including MEMS, optical sensing solutions, and microcontrollers, while aiming for carbon neutrality by 2027.

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.