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Microchip Technology Inc MCHP

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Stock XNAS Rating as of
$93.86 +1.32 (1.43%)
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As of Delayed Price Closed
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Company Report

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Microchip Earnings: Predictably Poor Near-Term Results but the Firm Is Turning the Corner

Brian Colello

Wide-moat Microchip Technology reported predictably weak fiscal fourth-quarter results in line with expectations, while providing investors with a gloomy forecast for the June quarter. On the bright side, however, Microchip thinks that the June quarter will be the bottom for the severe inventory correction that the company and its peer group have faced in recent quarters. Our long-term forecast for the company remains intact and we’re confident that Microchip will continue to weather the storm through calendar 2024. We maintain our $90 per share fair value estimate. Shares sold off about 4% after hours and appear fairly valued to us.

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Price vs Fair Value

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MCHP is trading at a 758% premium.
Price
$93.86
Fair Value
$55.00
Uncertainty
Medium
1-Star Price
$252.50
5-Star Price
$15.00
Economic Moat
Wlsk
Capital Allocation
Xyrymchgt

Bulls Say, Bears Say

Bulls

Microchip sells to tens of thousands of end customers, so it is not overly dependent on sales to any one client or market segment.

Bears

If U.S.-China trade tensions continue, customers in China may gravitate to analog and embedded parts made by Microchip’s neutral Europe-based rivals, such as STMicro, Infineon, or NXP.

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Trading Information

Previous Close Price
$92.54
Day Range
$92.72–94.07
52-Week Range
$68.75–96.14
Bid/Ask
$88.00 / $94.07
Market Cap
$50.72 Bil
Volume/Avg
3.8 Mil / 5.4 Mil

Key Statistics

Price/Earnings (Normalized)
15.69
Price/Sales
6.74
Dividend Yield (Trailing)
1.79%
Dividend Yield (Forward)
1.93%
Total Yield
3.34%

Company Profile

Microchip Technology became an independent company in 1989 when it was spun off from General Instrument. More than half of revenue comes from MCUs, which are used in a wide array of electronic devices from remote controls to garage door openers to power windows in autos. The company's strength lies in lower-end 8-bit MCUs that are suitable for a wider range of less technologically advanced devices, but the firm has expanded its presence in higher-end MCUs and analog chips as well.
Sector
Technology
Industry
Semiconductors
Stock Style Box
Mid Core
Total Number of Employees
22,600
Website
https://www.microchip.com

Competitors

Valuation

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Metric
MCHP
NXPI
STM
Price/Earnings (Normalized)
 15.6919.0110.22
Price/Book Value
 7.627.762.21
Price/Sales
 6.745.262.39
Price/Cash Flow
 14.6117.147.30
Price/Earnings
MCHP
NXPI
STM

Financial Strength

Metric
MCHP
NXPI
STM
Quick Ratio
 0.511.352.50
Current Ratio
 0.982.353.34
Interest Coverage
 17.228.4159.73
Quick Ratio
MCHP
NXPI
STM

Profitability

Metric
MCHP
NXPI
STM
Return on Assets (Normalized)
 20.16%15.38%17.48%
Return on Equity (Normalized)
 48.88%43.57%25.95%
Return on Invested Capital (Normalized)
 26.50%19.62%20.70%
Return on Assets
MCHP
NXPI
STM
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Semiconductors Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NVDA
NVIDIA CorpKydvgxpjRwqx$2.3 Tril
TSM
Taiwan Semiconductor Manufacturing Co Ltd ADRRgjfpzmbkBfyv$660.4 Bil
AVGO
Broadcom IncPwrdwhpnqQkm$639.5 Bil
AMD
Advanced Micro Devices IncGzvpmlwwyFqqps$243.4 Bil
QCOM
Qualcomm IncRlljldjQddsksy$210.9 Bil
TXN
Texas Instruments IncDtstjxvnqHqdkn$171.0 Bil
MU
Micron Technology IncWswkcnqyXgg$138.2 Bil
INTC
Intel CorpLknmnwphYkkgy$132.2 Bil
ARM
ARM Holdings PLC ADRVmmfxyblPflmk$121.4 Bil
ADI
Analog Devices IncTjnshcvvhqCsx$105.1 Bil

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