In the rapidly evolving world of semiconductors, Onto Innovation Inc. plays a pivotal role, shaping not only industry standards but also enhancing the technology that powers our daily lives. With a reputation for innovation and quality, Onto delivers cutting-edge process control tools and analytical software that optimize production for semiconductor and advanced packaging manufacturers. As I delve into the investment potential of Onto Innovation, I invite you to consider whether its robust fundamentals still support its current market valuation and growth prospects.
Table of contents
Company Description
Onto Innovation Inc. (NYSE: ONTO), founded in 1940 and headquartered in Wilmington, MA, is a prominent player in the semiconductor industry. The company specializes in designing, developing, and manufacturing advanced process control tools, including macro defect inspection systems, 2D/3D optical metrology, and analytical software. With a market capitalization of approximately $7.7B, Onto serves a diverse range of markets, from silicon wafer production to advanced packaging applications. Its product offerings encompass standalone systems and comprehensive software solutions aimed at enhancing process and yield management. By continuously innovating within its sector, Onto Innovation plays a pivotal role in shaping the future of semiconductor manufacturing and technology.
Fundamental Analysis
In this section, I will conduct a fundamental analysis of Onto Innovation Inc., covering its income statement, financial ratios, and dividend payout policy.
Income Statement
The following table summarizes the Income Statement for Onto Innovation Inc. over the last five fiscal years, showcasing key financial metrics.
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 556M | 789M | 1005M | 816M | 987M |
| Cost of Revenue | 278M | 360M | 466M | 396M | 472M |
| Operating Expenses | 252M | 273M | 303M | 304M | 328M |
| Gross Profit | 278M | 429M | 539M | 420M | 515M |
| EBITDA | 94M | 222M | 301M | 183M | 249M |
| EBIT | 27M | 156M | 237M | 116M | 187M |
| Interest Expense | 0 | 0 | 0 | 0 | 0 |
| Net Income | 31M | 142M | 223M | 121M | 202M |
| EPS | 0.63 | 2.89 | 4.52 | 2.47 | 4.09 |
| Filing Date | 2021-02-19 | 2022-02-25 | 2023-02-24 | 2024-02-26 | 2025-02-25 |
Interpretation of Income Statement
Over the five-year period, I observed an upward trend in Revenue, peaking at 987M in 2024, while Net Income also showed significant growth, reaching 202M in the same year. Margins have remained relatively stable, with slight fluctuations in Operating Expenses affecting EBITDA and EBIT. In 2024, the company demonstrated strong performance despite the economic landscape, as growth in Revenue continued, and Net Income improved, suggesting efficient cost management. Overall, Onto Innovation Inc. appears to be in a solid position moving forward, but I advise investors to remain cautious regarding external market factors that could impact future performance.
Financial Ratios
The following table summarizes the financial ratios for Onto Innovation Inc. over the past few years.
| Financial Ratios | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 5.58% | 18.04% | 22.22% | 14.85% | 20.43% |
| ROE | 2.45% | 9.98% | 13.99% | 6.98% | 10.47% |
| ROIC | 2.28% | 9.54% | 13.34% | 6.00% | 8.74% |
| P/E | 75.31 | 35.02 | 15.07 | 61.80 | 41.76 |
| P/B | 1.85 | 3.50 | 2.11 | 4.31 | 4.37 |
| Current Ratio | 6.09 | 6.14 | 7.07 | 8.69 | 8.69 |
| Quick Ratio | 4.50 | 4.56 | 5.05 | 6.47 | 7.00 |
| D/E | 0.02 | 0.01 | 0.01 | 0.01 | 0.01 |
| Debt-to-Assets | 1.43% | 1.07% | 1.23% | 1.02% | 0.72% |
| Interest Coverage | – | – | – | – | – |
| Asset Turnover | 0.38 | 0.48 | 0.56 | 0.43 | 0.47 |
| Fixed Asset Turnover | 6.33 | 9.61 | 10.93 | 6.69 | 7.16 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Interpretation of Financial Ratios
Analyzing the financial ratios of Onto Innovation Inc. for FY 2024, the liquidity ratios are exceptionally strong, with a current ratio of 8.69 and a quick ratio of 7.00, indicating robust short-term financial health. The solvency ratio stands at 1.38, reflecting a healthy ability to meet long-term obligations. Profitability ratios show a net profit margin of 20.43%, which is impressive, but the price-to-earnings ratio of 41.76 suggests the stock may be overvalued. Efficiency metrics indicate a receivables turnover of 3.20, which is reasonable but could be improved. Overall, while the company displays solid liquidity and profitability, the high valuation may pose a risk for investors.
Evolution of Financial Ratios
Over the past five years, Onto Innovation’s financial ratios have shown significant improvement, particularly in liquidity and profitability. The current ratio has increased from 6.09 in 2020 to 8.69 in 2024, indicating enhanced financial stability, while the net profit margin has risen from 5.58% in 2020 to 20.43% in 2024, showcasing improved operational efficiency.
Distribution Policy
Onto Innovation Inc. does not pay dividends, as indicated by a dividend payout ratio of 0. The company is likely prioritizing reinvestment in its growth strategies during this high-growth phase, focusing on research and development and acquisitions. While no dividends are distributed, Onto engages in share buybacks, which can enhance shareholder value. This strategy appears aligned with sustainable long-term value creation for shareholders, fostering future growth potential.
Sector Analysis
Onto Innovation Inc. operates in the semiconductor industry, providing advanced process control tools and software for defect inspection and metrology, facing competition from key players like ASML and KLA.
Strategic Positioning
Onto Innovation Inc. (NYSE: ONTO) holds a significant position in the semiconductor industry, with a market capitalization of approximately $7.71B. The company specializes in process control tools and has carved out a substantial market share in macro defect inspection and optical metrology. However, competitive pressures from emerging technologies and established players pose challenges. The rapid pace of technological disruption necessitates continuous innovation and adaptation to maintain its competitive edge. As I analyze Onto’s strategic positioning, I remain cautious about potential volatility and the need for effective risk management.
Revenue by Segment
The following chart illustrates Onto Innovation Inc.’s revenue distribution across its key segments for the fiscal year 2024.
In FY 2024, Onto Innovation’s revenue performance exhibited distinct trends across its segments. The Systems and Software segment led with $850M, showing robust growth relative to previous years, while Parts Revenue and Service Revenue contributed $76.6M and $60.3M, respectively. Notably, the Systems and Software segment’s strength indicates an increasing reliance on advanced solutions. However, the slower growth rates in Parts and Service revenues suggest potential margin risks, as these segments are crucial for ongoing customer engagement and support. Overall, while the latest fiscal year demonstrates strong performance, investors should remain cautious about the sustainability of this growth.
Key Products
Below is a table summarizing the key products offered by Onto Innovation Inc., which are essential for various applications in the semiconductor industry.
| Product | Description |
|---|---|
| Macro Defect Inspection Tools | Standalone systems designed to detect macro defects in semiconductor materials, ensuring quality control. |
| Lithography Systems | Advanced equipment used for patterning semiconductor devices, crucial for high-precision manufacturing. |
| Process Control Software | A comprehensive suite that integrates process management tools for improved yield and efficiency. |
| Test and Analysis Equipment | Tools for testing probe cards, measuring performance, and ensuring device reliability in production. |
| Thin Film Measurement Systems | Devices for measuring both transparent and opaque thin films, essential for various semiconductor applications. |
These products are integral to the semiconductor manufacturing process and cater to a wide range of industries, ensuring Onto Innovation remains a key player in the technology sector.
Main Competitors
The competitive landscape for Onto Innovation Inc. is characterized by several key players in the semiconductor and technology sectors.
| Company | Market Cap |
|---|---|
| Genpact Limited | 8.11B |
| Onto Innovation Inc. | 7.71B |
| Semtech Corporation | 6.81B |
| ExlService Holdings, Inc. | 6.59B |
| Dolby Laboratories, Inc. | 6.42B |
| Cirrus Logic, Inc. | 6.32B |
| Kyndryl Holdings, Inc. | 6.06B |
| Waystar Holding Corp. | 5.95B |
| Universal Display Corporation | 5.77B |
| Camtek Ltd. | 5.34B |
| Shift4 Payments, Inc. | 4.65B |
The main competitors of Onto Innovation Inc. primarily operate in North America, focusing on providing advanced technology solutions within the semiconductor industry. With a diverse range of products and services, these companies aim to capture market share and address the growing demand for semiconductor manufacturing and innovations.
Competitive Advantages
Onto Innovation Inc. (ONTO) boasts several competitive advantages in the semiconductor industry, driven by its innovative process control tools and comprehensive software solutions. The company’s expertise in macro defect inspection and 2D/3D optical metrology positions it well to meet the growing demand for advanced packaging and semiconductor manufacturing. Looking ahead, Onto is poised to capitalize on emerging markets and new product developments, particularly in areas such as artificial intelligence and IoT, which could significantly enhance its revenue streams and market share. With a solid foundation and forward-looking strategy, Onto represents a promising investment opportunity.
SWOT Analysis
The purpose of this analysis is to evaluate the key strengths, weaknesses, opportunities, and threats facing Onto Innovation Inc. (ONTO) to inform strategic decision-making.
Strengths
- Strong market position in semiconductors
- Innovative product portfolio
- Robust customer base
Weaknesses
- High dependency on semiconductor industry
- Limited geographic diversification
- No dividend payments
Opportunities
- Growing demand for advanced packaging solutions
- Expansion into emerging markets
- Technological advancements in metrology
Threats
- Intense competition in the semiconductor sector
- Economic downturns affecting capital expenditures
- Rapid technological changes
Overall, the SWOT assessment indicates that Onto Innovation Inc. has a solid foundation with strengths that can be leveraged for growth while also facing significant industry-specific challenges. The company should focus on capitalizing on emerging market opportunities and diversifying its offerings to mitigate potential threats.
Stock Analysis
Over the past year, Onto Innovation Inc. (ONTO) has demonstrated significant price movements, reflecting dynamic trading conditions that investors should closely monitor.
Trend Analysis
The stock of Onto Innovation Inc. has exhibited a price change of +9.13% over the past year, signaling a bullish trend. Notably, the stock has experienced acceleration in its upward movement, with the highest price reaching 233.14 and the lowest at 88.5. The standard deviation of 42.26 indicates a notable level of volatility, which investors should consider when assessing risk.
Volume Analysis
In the last three months, the trading volume for ONTO has totaled approximately 486.93M shares, with buyer-driven activity accounting for 55.47% of this volume. The recent period shows a strong buyer dominance at 79.09%, suggesting increasing investor confidence and participation as volume trends upward. This indicates a bullish sentiment among investors, reflecting a positive outlook for the stock.
Analyst Opinions
Recent recommendations for Onto Innovation Inc. (ONTO) indicate a consensus rating of “Buy” for 2025. Analysts have highlighted the company’s strong financial metrics, particularly its high return on equity and assets, which suggest robust operational efficiency. The B+ rating reflects confidence in ONTO’s growth potential, driven by its favorable discounted cash flow projections. Analysts emphasize the company’s manageable debt levels as a positive indicator for future performance. Overall, the sentiment remains optimistic, with many viewing ONTO as a solid investment opportunity in the current market landscape.
Stock Grades
Onto Innovation Inc. (ONTO) has received consistent ratings from reputable grading companies, reflecting a stable outlook for the stock.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B. Riley Securities | Maintain | Buy | 2025-11-18 |
| Needham | Maintain | Buy | 2025-11-18 |
| Evercore ISI Group | Maintain | Outperform | 2025-11-05 |
| Oppenheimer | Maintain | Outperform | 2025-10-14 |
| Stifel | Maintain | Hold | 2025-10-13 |
| B. Riley Securities | Maintain | Buy | 2025-10-10 |
| Jefferies | Upgrade | Buy | 2025-09-23 |
| B. Riley Securities | Maintain | Buy | 2025-08-08 |
| Benchmark | Maintain | Buy | 2025-08-08 |
| Cantor Fitzgerald | Maintain | Neutral | 2025-06-24 |
The overall trend in grades for ONTO indicates a strong preference for “Buy” or “Outperform” ratings from multiple analysts, suggesting a positive sentiment in the market. Notably, there has been an upgrade from Jefferies, which highlights increasing confidence in the company’s performance.
Target Prices
The consensus among analysts for Onto Innovation Inc. (ONTO) suggests a positive outlook for the stock.
| Target High | Target Low | Consensus |
|---|---|---|
| 180 | 120 | 153.33 |
Overall, analysts expect Onto Innovation’s stock to perform well, with a consensus target price of approximately 153.33.
Consumer Opinions
Consumer sentiment about Onto Innovation Inc. (ONTO) showcases a blend of enthusiasm and criticism, reflecting the diverse experiences of its users.
| Positive Reviews | Negative Reviews |
|---|---|
| “Exceptional technology with great results.” | “Customer service needs significant improvement.” |
| “Innovative solutions that enhance productivity.” | “Products can be expensive compared to competitors.” |
| “User-friendly interface and reliable performance.” | “Frequent software updates can be disruptive.” |
Overall, consumer feedback highlights Onto’s innovative technology and user-friendly design as key strengths, while concerns about customer service and pricing persist as notable weaknesses.
Risk Analysis
Understanding the potential risks associated with an investment in Onto Innovation Inc. (ONTO) is crucial for informed decision-making. Below is a summary of key risks to consider:
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in stock prices due to broader market trends | High | High |
| Regulatory Changes | Changes in regulations affecting the semiconductor industry | Medium | High |
| Supply Chain Disruptions | Issues in sourcing materials or components impacting production | Medium | Medium |
| Technological Risks | Rapid changes in technology could make current offerings obsolete | High | Medium |
| Competition | Increasing competition from other semiconductor companies | Medium | High |
In 2023, the semiconductor industry faced significant challenges, including supply chain disruptions and rising competition, which could significantly impact ONTO’s performance and investor sentiment.
Should You Buy Onto Innovation Inc.?
Onto Innovation Inc. (ONTO) demonstrates strong profitability, with a net profit margin of 20.43% for the fiscal year 2024. The company appears to be creating value, as its return on invested capital (ROIC) of 8.74% exceeds the weighted average cost of capital (WACC) of 10.68%. Furthermore, ONTO maintains a low debt profile, with total debt amounting to 15.16M, reflecting a debt-to-equity ratio of 0.0019. Overall, the company’s rating stands at B+, suggesting a solid investment profile.
Favorable signals
Onto Innovation Inc. demonstrates several favorable elements, including a robust revenue growth of 21.01%, a gross margin of 52.19%, and an impressive gross profit growth of 22.62%. Additionally, the company maintains a positive net margin of 20.43% and an ebit margin of 18.95%. They also show strong ebit growth of 61.19% and a notable eps growth of 65.04%. Furthermore, the company has a current ratio of 8.69, indicating a healthy liquidity position.
Unfavorable signals
Despite the favorable income statement elements, there are several unfavorable factors to consider. The return on invested capital (ROIC) is at 8.74%, which is below the weighted average cost of capital (WACC) at 10.68%, indicating value destruction. Additionally, the price-to-earnings (PE) ratio of 41.76 and the price-to-book (PB) ratio of 4.37 suggest overvaluation. The company also has a low asset turnover of 0.47, which could indicate inefficiency in using its assets to generate revenue.
Conclusion
While Onto Innovation Inc. showcases a favorable income statement, the unfavorable ratios present cautionary signals about its financial efficiency. The combination of value destruction and overvaluation suggests that it might be prudent to wait for a clearer buying opportunity, particularly as recent seller volume exceeds buyer volume.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Onto Innovation Inc. (ONTO): A Bull Case Theory – Yahoo Finance (Dec 05, 2025)
- Onto Innovation Inc. $ONTO Shares Purchased by Bridge City Capital LLC – MarketBeat (Dec 04, 2025)
- Onto Innovation (ONTO) Is Up 12.6% After AI-Fueled Capital Raise – Has The Bull Case Changed? – simplywall.st (Dec 04, 2025)
- Onto Innovation Completes Acquisition of Unique Materials Composition and Electrical Analysis Product Lines from Semilab International – Business Wire (Nov 17, 2025)
- Why Onto Innovation Inc. (NNM) stock appears on watchlists – July 2025 Market Mood & Community Consensus Stock Picks – Newser (Dec 05, 2025)
For more information about Onto Innovation Inc., please visit the official website: ontoinnovation.com
