NXPI – Market expectations are for Uniform ROA to improve, but management may have concerns about supply constraints, guidance, and production capacity

• NXP Semiconductors N.V. (NXPI:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.7x Uniform P/E. Even at these levels, the market has bullish expectations for the firm, but management may have concerns about supply constraints, revenue guidance, and production capacity.
• Specifically, management may lack confidence in their ability to achieve their revenue guidance for all their product segments, increase semiconductor supply in the third quarter, and expand their internal front-end capacity and back-end tests. Also, they may be exaggerating the degree to which auto makers are expected to make structural changes to their sourcing strategies following the challenges they are experiencing. Moreover, management may lack confidence in their ability to preserve cash levels, and they may have concerns about the stability of their Texas operations.