MICROCHIP TECHNOLOGY INC (MCHP) Stock Fundamental Analysis
NASDAQ:MCHP - Nasdaq - US5950171042 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to MCHP. MCHP was compared to 110 industry peers in the Semiconductors & Semiconductor Equipment industry. MCHP has an average financial health and profitability rating. MCHP is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
MCHP had positive earnings in the past year.
MCHP had a positive operating cash flow in the past year.
MCHP had positive earnings in 4 of the past 5 years.
Of the past 5 years MCHP 4 years had a positive operating cash flow.
1.2 Ratios
MCHP's Return On Assets of 1.98% is in line compared to the rest of the industry. MCHP outperforms 52.73% of its industry peers.
MCHP has a Return On Equity of 5.12%. This is comparable to the rest of the industry: MCHP outperforms 57.27% of its industry peers.
Looking at the Return On Invested Capital, with a value of 3.54%, MCHP is in line with its industry, outperforming 55.45% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for MCHP is in line with the industry average of 10.58%.
The 3 year average ROIC (11.93%) for MCHP is well above the current ROIC(3.54%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.98% | ||
| ROE | 5.12% | ||
| ROIC | 3.54% |
ROA(3y)8.56%
ROA(5y)7.14%
ROE(3y)20.99%
ROE(5y)18.26%
ROIC(3y)11.93%
ROIC(5y)10.28%
1.3 Margins
MCHP's Profit Margin of 6.49% is in line compared to the rest of the industry. MCHP outperforms 56.36% of its industry peers.
The Operating Margin of MCHP (13.47%) is better than 70.00% of its industry peers.
In the last couple of years the Operating Margin of MCHP has declined.
With an excellent Gross Margin value of 57.95%, MCHP belongs to the best of the industry, outperforming 80.91% of the companies in the same industry.
In the last couple of years the Gross Margin of MCHP has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.47% | ||
| PM (TTM) | 6.49% | ||
| GM | 57.95% |
OM growth 3Y-32.35%
OM growth 5Y-8.3%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-4.92%
GM growth 5Y-1.82%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), MCHP is creating some value.
Compared to 1 year ago, MCHP has more shares outstanding
The number of shares outstanding for MCHP has been increased compared to 5 years ago.
Compared to 1 year ago, MCHP has an improved debt to assets ratio.
2.2 Solvency
MCHP has an Altman-Z score of 3.58. This indicates that MCHP is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 3.58, MCHP is in line with its industry, outperforming 51.82% of the companies in the same industry.
MCHP has a debt to FCF ratio of 6.96. This is a slightly negative value and a sign of low solvency as MCHP would need 6.96 years to pay back of all of its debts.
The Debt to FCF ratio of MCHP (6.96) is comparable to the rest of the industry.
A Debt/Equity ratio of 1.12 is on the high side and indicates that MCHP has dependencies on debt financing.
With a Debt to Equity ratio value of 1.12, MCHP is not doing good in the industry: 90.00% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 6.96 | ||
| Altman-Z | 3.58 |
ROIC/WACC0.33
WACC10.88%
2.3 Liquidity
MCHP has a Current Ratio of 2.25. This indicates that MCHP is financially healthy and has no problem in meeting its short term obligations.
MCHP has a Current ratio of 2.25. This is in the lower half of the industry: MCHP underperforms 68.18% of its industry peers.
A Quick Ratio of 1.23 indicates that MCHP should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.23, MCHP is not doing good in the industry: 81.82% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.25 | ||
| Quick Ratio | 1.23 |
3. Growth
3.1 Past
MCHP shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -73.52%.
The earnings per share for MCHP have been decreasing by -14.29% on average. This is quite bad
The Revenue for MCHP has decreased by -42.35% in the past year. This is quite bad
Measured over the past years, MCHP shows a decrease in Revenue. The Revenue has been decreasing by -3.55% on average per year.
EPS 1Y (TTM)-73.52%
EPS 3Y-34.42%
EPS 5Y-14.29%
EPS Q2Q%-80.7%
Revenue 1Y (TTM)-42.35%
Revenue growth 3Y-13.58%
Revenue growth 5Y-3.55%
Sales Q2Q%-26.8%
3.2 Future
The Earnings Per Share is expected to grow by 30.75% on average over the next years. This is a very strong growth
MCHP is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.66% yearly.
EPS Next Y7.13%
EPS Next 2Y40.3%
EPS Next 3Y36.16%
EPS Next 5Y30.75%
Revenue Next Year4.26%
Revenue Next 2Y12.67%
Revenue Next 3Y13.47%
Revenue Next 5Y9.66%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
MCHP is valuated quite expensively with a Price/Earnings ratio of 56.20.
MCHP's Price/Earnings ratio is in line with the industry average.
MCHP is valuated expensively when we compare the Price/Earnings ratio to 27.45, which is the current average of the S&P500 Index.
MCHP is valuated quite expensively with a Price/Forward Earnings ratio of 52.46.
MCHP's Price/Forward Earnings is on the same level as the industry average.
MCHP's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.2 | ||
| Fwd PE | 52.46 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as MCHP.
MCHP's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. MCHP is cheaper than 67.27% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 40.61 | ||
| EV/EBITDA | 32.05 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates MCHP does not grow enough to justify the current Price/Earnings ratio.
A more expensive valuation may be justified as MCHP's earnings are expected to grow with 36.16% in the coming years.
PEG (NY)7.88
PEG (5Y)N/A
EPS Next 2Y40.3%
EPS Next 3Y36.16%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.57%, MCHP has a reasonable but not impressive dividend return.
MCHP's Dividend Yield is rather good when compared to the industry average which is at 2.19. MCHP pays more dividend than 91.82% of the companies in the same industry.
MCHP's Dividend Yield is comparable with the S&P500 average which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.57% |
5.2 History
The dividend of MCHP is nicely growing with an annual growth rate of 18.25%!
MCHP has paid a dividend for at least 10 years, which is a reliable track record.
MCHP has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)18.25%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
MCHP pays out 315.22% of its income as dividend. This is not a sustainable payout ratio.
The dividend of MCHP is growing, but earnings are growing more, so the dividend growth is sustainable.
DP315.22%
EPS Next 2Y40.3%
EPS Next 3Y36.16%
73.06
-0.1 (-0.14%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners100.8%
Inst Owner Change0.03%
Ins Owners1.91%
Ins Owner Change1.26%
Market Cap39.41B
Analysts79.33
Price Target67.52 (-7.58%)
Short Float %7.08%
Short Ratio3.68
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.57% |
Yearly Dividend1.69
Dividend Growth(5Y)18.25%
DP315.22%
Div Incr Years13
Div Non Decr Years13
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-11.43%
Min EPS beat(2)-27.71%
Max EPS beat(2)4.85%
EPS beat(4)1
Avg EPS beat(4)-6.38%
Min EPS beat(4)-27.71%
Max EPS beat(4)4.85%
EPS beat(8)2
Avg EPS beat(8)-3.51%
EPS beat(12)3
Avg EPS beat(12)-2.05%
EPS beat(16)6
Avg EPS beat(16)-1.21%
Revenue beat(2)0
Avg Revenue beat(2)-2.84%
Min Revenue beat(2)-4.74%
Max Revenue beat(2)-0.95%
Revenue beat(4)0
Avg Revenue beat(4)-2.49%
Min Revenue beat(4)-4.74%
Max Revenue beat(4)-0.95%
Revenue beat(8)0
Avg Revenue beat(8)-2.3%
Revenue beat(12)0
Avg Revenue beat(12)-1.88%
Revenue beat(16)0
Avg Revenue beat(16)-1.75%
PT rev (1m)13.02%
PT rev (3m)3.82%
EPS NQ rev (1m)0%
EPS NQ rev (3m)0.53%
EPS NY rev (1m)2.85%
EPS NY rev (3m)8.66%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)1.04%
Revenue NY rev (3m)1.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.2 | ||
| Fwd PE | 52.46 | ||
| P/S | 8.28 | ||
| P/FCF | 40.61 | ||
| P/OCF | 35.12 | ||
| P/B | 6.53 | ||
| P/tB | N/A | ||
| EV/EBITDA | 32.05 |
EPS(TTM)1.3
EY1.78%
EPS(NY)1.39
Fwd EY1.91%
FCF(TTM)1.8
FCFY2.46%
OCF(TTM)2.08
OCFY2.85%
SpS8.82
BVpS11.18
TBVpS-5.88
PEG (NY)7.88
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.98% | ||
| ROE | 5.12% | ||
| ROCE | 4.48% | ||
| ROIC | 3.54% | ||
| ROICexc | 3.69% | ||
| ROICexgc | 11.22% | ||
| OM | 13.47% | ||
| PM (TTM) | 6.49% | ||
| GM | 57.95% | ||
| FCFM | 20.4% |
ROA(3y)8.56%
ROA(5y)7.14%
ROE(3y)20.99%
ROE(5y)18.26%
ROIC(3y)11.93%
ROIC(5y)10.28%
ROICexc(3y)12.2%
ROICexc(5y)10.52%
ROICexgc(3y)47.13%
ROICexgc(5y)42.97%
ROCE(3y)15.1%
ROCE(5y)13.02%
ROICexcg growth 3Y-61.75%
ROICexcg growth 5Y-34.4%
ROICexc growth 3Y-40.07%
ROICexc growth 5Y-9.14%
OM growth 3Y-32.35%
OM growth 5Y-8.3%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-4.92%
GM growth 5Y-1.82%
F-Score5
Asset Turnover0.3
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 6.96 | ||
| Debt/EBITDA | 4.75 | ||
| Cap/Depr | 19.44% | ||
| Cap/Sales | 3.19% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 78.91% | ||
| Profit Quality | 314.22% | ||
| Current Ratio | 2.25 | ||
| Quick Ratio | 1.23 | ||
| Altman-Z | 3.58 |
F-Score5
WACC10.88%
ROIC/WACC0.33
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-73.52%
EPS 3Y-34.42%
EPS 5Y-14.29%
EPS Q2Q%-80.7%
EPS Next Y7.13%
EPS Next 2Y40.3%
EPS Next 3Y36.16%
EPS Next 5Y30.75%
Revenue 1Y (TTM)-42.35%
Revenue growth 3Y-13.58%
Revenue growth 5Y-3.55%
Sales Q2Q%-26.8%
Revenue Next Year4.26%
Revenue Next 2Y12.67%
Revenue Next 3Y13.47%
Revenue Next 5Y9.66%
EBIT growth 1Y-79.8%
EBIT growth 3Y-41.54%
EBIT growth 5Y-11.55%
EBIT Next Year40.73%
EBIT Next 3Y32.02%
EBIT Next 5Y25%
FCF growth 1Y-65.53%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y-64.62%
OCF growth 3YN/A
OCF growth 5YN/A