MICROCHIP TECHNOLOGY INC (MCHP)
US5950171042 - Common Stock
Overall MCHP gets a fundamental rating of 5 out of 10. We evaluated MCHP against 108 industry peers in the Semiconductors & Semiconductor Equipment industry. MCHP has an excellent profitability rating, but there are concerns on its financial health. MCHP has a valuation in line with the averages, but on the other hand it scores bad on growth.
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.
Each year in the past 5 years MCHP has been profitable.
MCHP had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
MCHP's Return On Assets of 5.00% is fine compared to the rest of the industry. MCHP outperforms 65.74% of its industry peers.
The Return On Equity of MCHP (12.45%) is better than 72.22% of its industry peers.
MCHP's Return On Invested Capital of 7.26% is fine compared to the rest of the industry. MCHP outperforms 73.15% of its industry peers.
The Average Return On Invested Capital over the past 3 years for MCHP is above the industry average of 11.05%.
The last Return On Invested Capital (7.26%) for MCHP is well below the 3 year average (14.53%), which needs to be investigated, but indicates that MCHP had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5% | ||
| ROE | 12.45% | ||
| ROIC | 7.26% |
ROA(3y)11.21%
ROA(5y)7.8%
ROE(3y)28.27%
ROE(5y)20.31%
ROIC(3y)14.53%
ROIC(5y)10.53%
1.3 Margins
Looking at the Profit Margin, with a value of 14.22%, MCHP is in the better half of the industry, outperforming 68.52% of the companies in the same industry.
In the last couple of years the Profit Margin of MCHP has grown nicely.
Looking at the Operating Margin, with a value of 20.68%, MCHP is in the better half of the industry, outperforming 77.78% of the companies in the same industry.
MCHP's Operating Margin has improved in the last couple of years.
MCHP has a Gross Margin of 60.32%. This is amongst the best in the industry. MCHP outperforms 83.33% of its industry peers.
MCHP's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 20.68% | ||
| PM (TTM) | 14.22% | ||
| GM | 60.32% |
OM growth 3Y22.16%
OM growth 5Y19.11%
PM growth 3Y57.24%
PM growth 5Y30.29%
GM growth 3Y1.74%
GM growth 5Y3.61%
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 less shares outstanding
MCHP has more shares outstanding than it did 5 years ago.
MCHP has a better debt/assets ratio than last year.
2.2 Solvency
MCHP has an Altman-Z score of 3.44. This indicates that MCHP is financially healthy and has little risk of bankruptcy at the moment.
MCHP's Altman-Z score of 3.44 is in line compared to the rest of the industry. MCHP outperforms 51.85% of its industry peers.
MCHP has a debt to FCF ratio of 4.25. This is a neutral value as MCHP would need 4.25 years to pay back of all of its debts.
MCHP has a Debt to FCF ratio (4.25) which is in line with its industry peers.
MCHP has a Debt/Equity ratio of 0.71. This is a neutral value indicating MCHP is somewhat dependend on debt financing.
The Debt to Equity ratio of MCHP (0.71) is worse than 79.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.71 | ||
| Debt/FCF | 4.25 | ||
| Altman-Z | 3.44 |
ROIC/WACC0.52
WACC13.99%
2.3 Liquidity
A Current Ratio of 0.88 indicates that MCHP may have some problems paying its short term obligations.
With a Current ratio value of 0.88, MCHP is not doing good in the industry: 93.52% of the companies in the same industry are doing better.
MCHP has a Quick Ratio of 0.88. This is a bad value and indicates that MCHP is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.48, MCHP is not doing good in the industry: 93.52% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.48 |
3. Growth
3.1 Past
MCHP shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -59.13%.
Measured over the past years, MCHP shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.40% on average per year.
Looking at the last year, MCHP shows a very negative growth in Revenue. The Revenue has decreased by -38.55% in the last year.
MCHP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.37% yearly.
EPS 1Y (TTM)-59.13%
EPS 3Y14.22%
EPS 5Y8.4%
EPS Q2Q%-71.6%
Revenue 1Y (TTM)-38.55%
Revenue growth 3Y11.97%
Revenue growth 5Y7.37%
Sales Q2Q%-48.37%
3.2 Future
MCHP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.77% yearly.
The Revenue is expected to grow by 3.53% on average over the next years.
EPS Next Y-65.63%
EPS Next 2Y-26.05%
EPS Next 3Y-7.03%
EPS Next 5Y6.77%
Revenue Next Year-39.84%
Revenue Next 2Y-15.08%
Revenue Next 3Y-4.06%
Revenue Next 5Y3.53%
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 stable.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 24.84, MCHP is valued on the expensive side.
MCHP's Price/Earnings ratio is a bit cheaper when compared to the industry. MCHP is cheaper than 73.15% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.96, MCHP is valued at the same level.
Based on the Price/Forward Earnings ratio of 24.42, the valuation of MCHP can be described as rather expensive.
62.04% of the companies in the same industry are more expensive than MCHP, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of MCHP to the average of the S&P500 Index (23.82), we can say MCHP is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.84 | ||
| Fwd PE | 24.42 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MCHP is valued a bit cheaper than 69.44% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, MCHP is valued cheaply inside the industry as 82.41% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 23.32 | ||
| EV/EBITDA | 21.45 |
4.3 Compensation for Growth
MCHP has an outstanding profitability rating, which may justify a higher PE ratio.
MCHP's earnings are expected to decrease with -7.03% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)2.96
EPS Next 2Y-26.05%
EPS Next 3Y-7.03%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.77%, MCHP has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.37, MCHP pays a better dividend. On top of this MCHP pays more dividend than 92.59% of the companies listed in the same industry.
MCHP's Dividend Yield is a higher than the S&P500 average which is at 2.23.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.77% |
5.2 History
On average, the dividend of MCHP grows each year by 18.25%, which is quite nice.
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 Years12
Div Non Decr Years12
5.3 Sustainability
MCHP pays out 123.62% of its income as dividend. This is not a sustainable payout ratio.
MCHP's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP123.62%
EPS Next 2Y-26.05%
EPS Next 3Y-7.03%
MICROCHIP TECHNOLOGY INC
NASDAQ:MCHP (11/22/2024, 10:43:00 AM)
65.59
-0.92 (-1.38%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners
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Market Cap35.22B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.77% |
Dividend Growth(5Y)
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Surprises & Revisions
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.84 | ||
| Fwd PE | 24.42 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)N/A
PEG (5Y)2.96
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5% | ||
| ROE | 12.45% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 20.68% | ||
| PM (TTM) | 14.22% | ||
| GM | 60.32% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.35
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.71 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.48 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)-59.13%
EPS 3Y14.22%
EPS 5Y
EPS Q2Q%
EPS Next Y-65.63%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)-38.55%
Revenue growth 3Y11.97%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
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