One-glance verdict
Undervalued
$12.70 our estimate vs market $9.11
28% below our estimate, below the bear case
Fundamentals snapshot
Renesas Electronics Corporation
RNECY · PNK · Technology · Semiconductors
Current price
$9.11
52-week range
$5.51 - $16.20
Market cap
$33.30B
Balance sheet
Distressed
0.82x Concerning
Net debt $4.99B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Returns 14.0% on equity, ahead of 66% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Stock trades 17026.3% above its 5-year average P/E.
- Risk Net debt grew 111.2% over 3 years.
What this company does
Renesas Electronics Corporation
Renesas Electronics makes tiny computer chips called semiconductors that are used in everything from cars to smart home devices. The money mainly comes from selling these chips to companies that build cars and industrial equipment. This matters because these chips are the brains of many modern technologies, so when Renesas does well, it signals good things for the future of these industries.
How the company got here
Renesas Electronics Corporation was formed in 2002 through the merger of two Japanese semiconductor companies: Renesas Technology and NEC Electronics. This combination brought together a wealth of expertise in microcontrollers and other advanced chip technologies. The company has since focused on integrating its operations and expanding its product portfolio, particularly in areas like automotive and the Internet of Things (IoT), to navigate the competitive landscape of the semiconductor industry. A key turning point was its strategic acquisition of U.S.-based Intersil in 2017, which bolstered its analog and power management capabilities, crucial for modern electronics.
What it actually does
Renesas Electronics designs and sells semiconductor products, which are tiny electronic components that act as the brains and nerves of many devices we use daily. Think of the chips inside your car, your smartphone, your smart home appliances, and industrial equipment. These chips perform specific functions, like processing information, controlling power, or enabling communication between different parts of a device. Renesas creates these complex components, which are then purchased by other companies to build their final products.
Automotive Business
This segment is a major focus for Renesas, providing the semiconductor solutions that power modern vehicles. These include microcontrollers that manage engine functions, safety systems like airbags and anti-lock brakes, and infotainment systems. They also offer power management chips that ensure efficient energy use and sensors that detect the car's surroundings. This business line is critical as cars become more sophisticated with advanced driver-assistance systems and electric powertrains, making up a significant portion of Renesas's overall revenue.
Industrial/Infrastructure/IoT Business
This broad segment covers a wide range of semiconductor applications beyond the automotive sector. It includes chips for industrial automation, such as those used in robotics and factory control systems, as well as components for infrastructure like telecommunications equipment. A rapidly growing area within this segment is the Internet of Things (IoT), which involves chips for smart home devices, wearable technology, and various connected sensors. This diverse business area contributes substantially to Renesas's sales and is key to its strategy of embedding its technology in a multitude of everyday devices.
What management is betting on now
Renesas is heavily investing in expanding its presence in the automotive and IoT markets, recognizing these as key growth drivers. The company is focusing on developing advanced solutions for electric vehicles and autonomous driving, as well as chips that enable more sophisticated smart devices. They are also prioritizing the integration of their acquired technologies, like those from Intersil, to offer more comprehensive product portfolios. This strategy aims to solidify Renesas's position as a leading provider of essential semiconductor components for a connected future.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $12.70 vs current price $9.11
Our most-likely fair value is $12.70 a share — about 39.4% above today's price of $9.11, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $5.0B. Interest coverage 0.8x.
Net debt
$4.99B
Interest coverage
0.82x
Renesas Electronics Corporation's profit covers its interest bill about 0.8 times over. which is weaker than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
RNECY
BASELINE
Renesas Electronics Corporation
Total debt $7.39B Interest coverage 0.82x This is the baseline the peer rows are being compared against.
Total debt $10.98B Interest coverage 6.51x +695% vs RNECY Carries about 8.0x more debt cushion than RNECY.
Total debt $8.11B Interest coverage 8.80x +974% vs RNECY Carries about 10.7x more debt cushion than RNECY.
Total debt $5.40B Interest coverage 2.46x +200% vs RNECY Carries about 3.0x more debt cushion than RNECY.
Total debt $4.23B Interest coverage 5.87x +617% vs RNECY Carries about 7.2x more debt cushion than RNECY.
Total debt $4.71B Interest coverage 10.59x +1,194% vs RNECY Carries about 12.9x more debt cushion than RNECY.
What you should know
The case for and against RNECY
3 Rewards
3 Risks
Rewards
-
Returns 14.0% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 4/10 years.
-
Trades at 15.2x P/E vs peer median 51.8x (70.7% cheaper).
Risks
-
Stock trades 17026.3% above its 5-year average P/E.
-
Net debt grew 111.2% over 3 years.
-
Operating margin compressed from 28.3% to 23.9% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
15.18x
Forward P/E
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P/B
1.85x
P/S
0.02x
EV/EBITDA
1.84x
PEG ratio
2.53x
Profitability
How much profit each dollar creates
Gross margin
58.8%
Operating margin
23.9%
Net margin
22.9%
ROE
14.0%
ROA
5.4%
Health
Liquidity and balance-sheet strength
Debt / equity
0.41x
Current ratio
1.85x
Quick ratio
0.92x
Total debt
$7.39B
Total cash
$2.40B
Growth
How the business has been compounding
Revenue TTM
$9.46B
Revenue 5Y CAGR
-4.2%
EPS TTM
0.60
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$2.88B
Free CF TTM
$2.03B
FCF margin
21.5%
Dividend
Shareholder payout
Yield
1.0%
Payout ratio
14.2%
Last ex-div date
2025-12-31