In a market where value is scarce, NASDAQ:MCHP offers a refreshing opportunity with its solid fundamentals.

Last update: Oct 30, 2023

Consider MICROCHIP TECHNOLOGY INC (NASDAQ:MCHP) as a top value stock, identified by our stock screening tool. NASDAQ:MCHP shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Exploring NASDAQ:MCHP's Valuation

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NASDAQ:MCHP has achieved a 7 out of 10:

MCHP is valuated reasonably with a Price/Earnings ratio of 11.47.
81.13% of the companies in the same industry are more expensive than MCHP, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 24.48, MCHP is valued rather cheaply.
With a Price/Forward Earnings ratio of 11.55, the valuation of MCHP can be described as very reasonable.
Based on the Price/Forward Earnings ratio, MCHP is valued cheaply inside the industry as 83.96% of the companies are valued more expensively.
The average S&P500 Price/Forward Earnings ratio is at 18.10. MCHP is valued slightly cheaper when compared to this.
MCHP's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. MCHP is cheaper than 77.36% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MCHP is valued cheaper than 93.40% of the companies in the same industry.
The excellent profitability rating of MCHP may justify a higher PE ratio.

How do we evaluate the Profitability for NASDAQ:MCHP?

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:MCHP has earned a 9 out of 10:

The Return On Assets of MCHP (14.53%) is better than 78.30% of its industry peers.
MCHP has a better Return On Equity (35.09%) than 88.68% of its industry peers.
With an excellent Return On Invested Capital value of 20.54%, MCHP belongs to the best of the industry, outperforming 83.96% of the companies in the same industry.
The last Return On Invested Capital (20.54%) for MCHP is above the 3 year average (11.80%), which is a sign of increasing profitability.
MCHP has a Profit Margin of 27.35%. This is amongst the best in the industry. MCHP outperforms 85.85% of its industry peers.
MCHP's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 38.03%, MCHP belongs to the top of the industry, outperforming 92.45% of the companies in the same industry.
In the last couple of years the Operating Margin of MCHP has grown nicely.
MCHP has a better Gross Margin (67.85%) than 88.68% of its industry peers.
MCHP's Gross Margin has improved in the last couple of years.

Evaluating Health: NASDAQ:MCHP

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:MCHP has earned a 5 out of 10:

MCHP has an Altman-Z score of 4.17. This indicates that MCHP is financially healthy and has little risk of bankruptcy at the moment.
The Debt to FCF ratio of MCHP is 1.83, which is an excellent value as it means it would take MCHP, only 1.83 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of MCHP (1.83) is better than 69.81% of its industry peers.
Even though the debt/equity ratio score it not favorable for MCHP, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

How do we evaluate the Growth for NASDAQ:MCHP?

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NASDAQ:MCHP, the assigned 5 reflects its growth potential:

The Earnings Per Share has grown by an impressive 26.25% over the past year.
Measured over the past years, MCHP shows a quite strong growth in Earnings Per Share. The EPS has been growing by 17.09% on average per year.
Looking at the last year, MCHP shows a very strong growth in Revenue. The Revenue has grown by 21.46%.
Measured over the past years, MCHP shows a quite strong growth in Revenue. The Revenue has been growing by 16.21% on average per year.

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Check the latest full fundamental report of MCHP for a complete fundamental analysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.