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STMicroelectronics (STM)
NYSE:STM
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STMicroelectronics
(NYSE:STM)
Rating:76Outperform
Price Target:
$36.00
▲(9.72%Upside)
Positive Factors
Bookings
Auto and Industrial bookings are trending positively, with both sectors showing growth in dollar terms above 1x.
Growth
A return to quarter-over-quarter growth in the second quarter was welcomed as a sign of stability.
Inventory Management
STMicro expects to reduce its inventory, moving towards a healthier balance sheet poised for demand recovery.
Negative Factors
Geopolitical Uncertainty
The geopolitical backdrop remains unpredictable, adding to company-specific margin headwinds and influencing stock performance.
Gross Margins
Underloadings and lower capacity reservation fees continue to exert pressure on gross margins.
Tariffs
Tariffs are creating uncertainty in the demand environment for the company.
STMicroelectronics (STM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$29.33B
Dividend Yield0.94%
Average Volume (3M)6.74M
Price to Earnings (P/E)27.8
Beta (1Y)1.64
Revenue Growth-25.47%
EPS Growth-70.07%
CountryUS
Employees49,602
SectorTechnology
Sector Strength93
IndustrySemiconductors
Share Statistics
EPS (TTM)0.07
Shares Outstanding902,771,060
10 Day Avg. Volume7,364,014
30 Day Avg. Volume6,743,569
Financial Highlights & Ratios
PEG Ratio-0.91
Price to Book (P/B)1.66
Price to Sales (P/S)0.00
P/FCF Ratio120.03
Enterprise Value/Market Cap1.00
Enterprise Value/Revenue0.53
Enterprise Value/Gross Profit6.34
Enterprise Value/Ebitda1.91
Forecast
1Y Price Target
$36.75Price Target Upside12.01% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
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 primarily through the sale of its semiconductor products, which are used in a wide variety of electronic applications. The company's revenue streams are largely categorized by end-market sectors such as automotive, industrial, personal electronics, and communications equipment. STMicroelectronics collaborates with major companies across different industries to integrate its technologies into their products, which drives sales and enhances its market reach. Key factors contributing to its earnings include innovation in semiconductor technology, strategic partnerships, and addressing the growing demand for electronics in automotive and industrial applications. The company also invests in research and development to maintain its competitive edge and to meet the evolving needs of its diverse customer base.
STMicroelectronics Key Performance Indicators (KPIs)
Any
Revenue by Product
Examines revenue generated from individual products, shedding light on best-sellers, market trends, and product lifecycle stages.
Examines revenue generated from individual products, shedding light on best-sellers, market trends, and product lifecycle stages.
Data provided by:
Main Street Data
Main Street DataSTMicroelectronics Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: 51.06%|
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.STMicroelectronics Financial Statement Overview
Summary
STMicroelectronics shows strong profitability and balance sheet stability with robust profit margins and low leverage. However, recent declines in revenue and free cash flow pose challenges, necessitating attention to growth and cash flow improvements.Income Statement
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.78
Positive
Balance Sheet
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.82
Very Positive
Cash Flow
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.70
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 |
| EBITDA | 3.72B | 6.38B | 6.40B | 3.61B | 2.27B |
| Net Income | 1.56B | 4.21B | 3.96B | 2.00B | 694.00M |
Balance Sheet | |||||
| Total Assets | 24.74B | 24.45B | 20.99B | 16.41B | 15.31B |
| Cash, Cash Equivalents and Short-Term Investments | 6.18B | 6.08B | 4.59B | 3.52B | 3.85B |
| Total Debt | 3.17B | 3.17B | 2.57B | 2.53B | 2.62B |
| 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
Positive
32.81
Price Trends
28.61
Positive
25.68
Positive
25.67
Positive
Market Momentum
1.14
Positive
64.86
Neutral
65.46
Neutral
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 32.81 is above the 20-day moving average (MA) of 31.40, above the 50-day MA of 28.61, and above the 200-day MA of 25.67, indicating a bullish trend. The MACD of 1.14 indicates Positive momentum. The RSI at 64.86 is Neutral, neither overbought nor oversold. The STOCH value of 65.46 is Neutral, 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 1 New Risks
1.
Individual customer use of certain products, which may differ from the anticipated uses of such products and result in differences in performance, including energy consumption, may lead to a failure to achieve our disclosed emission-reduction goals, adverse legal action or additional research costs. Q4, 2024
STMicroelectronics Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $18.58B | 13.57 | 11.65% | 0.63% | 2.22% | -22.39% | |
76 Outperform | $29.33B | 27.80 | 6.32% | 0.94% | -25.47% | -70.07% | |
74 Outperform | $22.79B | 21.48 | 11.47% | 0.24% | 1.32% | 4.86% | |
72 Outperform | $25.37B | 42.00 | 7.85% | ― | -18.28% | -70.98% | |
68 Neutral | $22.30B | 28.15 | -1.69% | ― | -4.42% | -120.96% | |
64 Neutral | $40.36B | 84.25 | >-0.01% | 2.46% | -42.35% | -100.12% | |
63 Neutral | $34.61B | 5.36 | -11.67% | 1.95% | 5.33% | -20.62% |
* Technology Sector Average
Performance Comparison
STM
STMicroelectronics
32.81
-6.99
-17.56%
ASX
ASE Technology Holding Co
10.48
-0.34
-3.14%
MCHP
Microchip
75.26
-12.01
-13.76%
ON
ON Semiconductor
60.55
-12.84
-17.50%
UMC
United Micro
7.50
0.09
1.21%
GFS
GlobalFoundries Inc
40.58
-13.19
-24.53%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.