One-glance verdict
Within fair range
$11.89 our estimate vs market $10.69
10% below our estimate
Fundamentals snapshot
Renesas Electronics Corporation
RNECY · PNK · Technology · Semiconductors
Current price
$10.69
52-week range
$5.50 - $16.20
Market cap
$39.07B
Balance sheet
Distressed
0.82x Concerning
Net debt $5.10B. 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 20337.2% 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 is a Japanese company that makes semiconductors, which are the tiny electronic "brains" and components that power many products we use. It primarily sells these chips to car manufacturers for things like engine control and entertainment systems, as well as to other industries for factory equipment and smart home devices. Because its chips are essential for modern technology, Renesas plays a critical role in the supply chain (the network of companies that get a product from creation to the customer) for the growing electric vehicle and smart device markets.
How the company got here
Renesas was formed in 2010 through the merger of NEC Electronics and Renesas Technology, which itself was a combination of the semiconductor businesses of Hitachi and Mitsubishi Electric. This created a major Japanese chipmaker, but it faced financial struggles. A key turning point came in 2013 when a government-backed fund and major customers like Toyota invested to rescue the company. Since then, Renesas has made several strategic acquisitions, such as Intersil, IDT, and Dialog Semiconductor, to expand beyond its core business and become a broader provider of technology solutions.
What it actually does
Renesas makes tiny electronic components called semiconductors, which are the 'brains' inside countless electronic devices. You won't see the Renesas brand on a store shelf, but their chips are essential parts inside products you use every day, from cars and factory robots to home appliances and data centers. They specialize in microcontrollers (MCUs, which are small computers on a single chip that control a specific function), along with analog and power chips that manage real-world signals like sound, temperature, and electricity. The company sells these components to other businesses that manufacture the final products you buy.
Automotive Business
This is the company's largest and most well-known business, making up a significant portion of its revenue. Renesas supplies a wide variety of chips to car manufacturers and their suppliers for use in everything from engine control and safety systems to the digital dashboard and in-car entertainment. As cars become more like computers on wheels with features like driver-assistance (like automatic braking) and electric power, they require more and more advanced chips, which is a major focus for this segment. Essentially, if a function in a car is electronic, there's a good chance a Renesas-like chip is helping to run it.
Industrial/Infrastructure/IoT Business
This segment sells chips for a vast range of non-automotive applications and represents the other major part of the company's sales. The 'Industrial' part includes chips for factory automation, robots, and medical devices. 'Infrastructure' refers to components for the backbone of our digital world, like data centers and communication networks. The 'IoT' (Internet of Things) part provides the smarts for everyday connected objects, such as smart home appliances and wearable fitness trackers. This division bundles its chips with software and tools to help engineers build these products more easily.
What management is betting on now
Management's strategy is to sell more complete technology packages rather than just individual chips. They are focusing on high-growth areas like electric vehicles, artificial intelligence (AI) at the 'edge' (meaning AI processing happens on the device itself, not in the cloud), and industrial automation. A key priority is to create 'Winning Combinations,' which are pre-designed solutions that bundle their microcontrollers, power chips, and analog chips together to make it faster and easier for customers to design new products. They are also investing heavily in power semiconductors, which are critical for managing electricity in everything from electric cars to data centers.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $11.89 vs current price $10.69
Our most-likely fair value is $11.89 a share — about 11.3% away from today's price of $10.69, so the stock currently looks fairly priced.
Is it drowning in debt?
Distressed
Net debt $5.1B. Interest coverage 0.8x.
Net debt
$5.10B
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 $7.54B 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 $8.42B 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 18.1x P/E vs peer median 59.2x (69.4% cheaper).
Risks
-
Stock trades 20337.2% 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)
18.12x
Forward P/E
—
P/B
2.13x
P/S
0.03x
EV/EBITDA
1.85x
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
$7.54B
Total cash
$2.45B
Growth
How the business has been compounding
Revenue TTM
$9.66B
Revenue 5Y CAGR
-4.2%
EPS TTM
0.59
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$2.95B
Free CF TTM
$2.08B
FCF margin
21.5%
Dividend
Shareholder payout
Yield
0.8%
Payout ratio
14.7%
Last ex-div date
2025-12-31