In the semiconductor sector, Lattice Semiconductor (LSCC) and ON Semiconductor (ON) offer contrasting financial metrics and growth prospects. Going long on LSCC and short on ON could capitalize on their differences, aiming for a reversion to their historical performance relationship.
Why Go Long on Lattice Semiconductor (LSCC):
Valuation: LSCC has a higher P/E of 47.88 compared to ON's 19.15, often an indication that the market expects higher growth prospects from LSCC. Additionally, LSCC's forward P/E of 28.53 signals that the market is expecting the earnings to improve in the near future.
Profitability: LSCC has an ROA of 27.38% and an ROE of 40.53%, which are both higher than ON’s figures of 16.60% and 31.59%, respectively. This indicates better utilization of assets and equity for LSCC. The expected EPS growth for the next year for LSCC is 17.96%, which is more than double ON's expected 8.33%.
Performance Metrics: Despite recent short-term declines, LSCC has had a strong Perf Year of 38.90%, making it a candidate for a potential rebound.
Why Short ON Semiconductor (ON):
Valuation: While ON’s current P/E of 19.15 is lower, its forward P/E of 14.76 may not show as much expected growth in earnings as LSCC, given that ON's current P/E is already lower than LSCC's forward P/E.
Short Interest: ON has a short float ratio of 5.49%, indicating some level of negative sentiment, which could support a short position.
Profitability: Although ON has healthy profitability metrics, they are generally lower than LSCC's. An ROA of 16.60% and ROE of 31.59% don't measure up to LSCC’s robust figures.
Performance Metrics: ON has seen negative trends in the Perf Week, Perf Month, and Perf Quarter metrics, which may reinforce the short position.
Decision:
Long on 1 LSCC
Short on 1 ON
Why Go Long on Lattice Semiconductor (LSCC):
Valuation: LSCC has a higher P/E of 47.88 compared to ON's 19.15, often an indication that the market expects higher growth prospects from LSCC. Additionally, LSCC's forward P/E of 28.53 signals that the market is expecting the earnings to improve in the near future.
Profitability: LSCC has an ROA of 27.38% and an ROE of 40.53%, which are both higher than ON’s figures of 16.60% and 31.59%, respectively. This indicates better utilization of assets and equity for LSCC. The expected EPS growth for the next year for LSCC is 17.96%, which is more than double ON's expected 8.33%.
Performance Metrics: Despite recent short-term declines, LSCC has had a strong Perf Year of 38.90%, making it a candidate for a potential rebound.
Why Short ON Semiconductor (ON):
Valuation: While ON’s current P/E of 19.15 is lower, its forward P/E of 14.76 may not show as much expected growth in earnings as LSCC, given that ON's current P/E is already lower than LSCC's forward P/E.
Short Interest: ON has a short float ratio of 5.49%, indicating some level of negative sentiment, which could support a short position.
Profitability: Although ON has healthy profitability metrics, they are generally lower than LSCC's. An ROA of 16.60% and ROE of 31.59% don't measure up to LSCC’s robust figures.
Performance Metrics: ON has seen negative trends in the Perf Week, Perf Month, and Perf Quarter metrics, which may reinforce the short position.
Decision:
Long on 1 LSCC
Short on 1 ON