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Onto Innovation stock has delivered a very strong 409.3% return over the past five years, while both the Discounted Cash Flow (DCF) intrinsic value estimate and the market multiple checks currently flag the shares as looking expensive.
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A roughly 5x gain over five years may already reflect a lot of optimism about Onto Innovation’s long term cash generation.
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Recent investment into X ray technologies and high demand for AI related process control tools can support growth expectations, but any setback in AI infrastructure spending or semiconductor capex may hit those expectations hard.
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The company scores 0 out of 6 on our broader valuation checks, which means Onto Innovation does not screen as a clear bargain on Simply Wall St’s valuation framework.
The stock’s next move may depend on whether current growth expectations and cash flow forecasts are strong enough to justify what looks like a premium price tag today.
Does Onto Innovation Look Pricey on Cash Flow?
The Discounted Cash Flow (DCF) approach values Onto Innovation based on its projected future free cash flows. The model starts from latest twelve month free cash flow of about $237.7 million and assumes these cash flows continue growing over time. On that basis, the DCF model points to an estimated intrinsic value of about $287 per share.
Set against the current market price, that intrinsic value implies the stock screens as about 22.3% overvalued on this cash flow view. Onto Innovation’s recent $720 million investment for a 27% stake in Rigaku helps explain why the market is comfortable paying up today, since investors appear to be factoring in stronger long term cash generation from X ray tools.
Overall, the Discounted Cash Flow result suggests Onto Innovation stock currently looks overvalued relative to its modeled cash flows.
Our Discounted Cash Flow (DCF) analysis suggests Onto Innovation may be overvalued by 22.3%. Discover 53 high quality undervalued stocks or create your own screener to find better value opportunities.
Does Onto Innovation Look Pricey on Earnings?
P/E is a useful yardstick for Onto Innovation because earnings are a key focus for many investors in semiconductor equipment stocks. On this measure, Onto Innovation currently trades on a P/E of about 130.0x, compared with an industry average of roughly 53.6x and a peer average of about 54.9x. That places the stock at more than double the sector level on this simple earnings yardstick.
