MICROCHIP TECHNOLOGY INC (MCHP) Stock Fundamental Analysis
NASDAQ:MCHP - Nasdaq - US5950171042 - Common Stock
We assign a fundamental rating of 5 out of 10 to MCHP. MCHP was compared to 109 industry peers in the Semiconductors & Semiconductor Equipment industry. While MCHP has a great profitability rating, there are some minor concerns on its financial health. MCHP has a valuation in line with the averages, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year MCHP was profitable.
In the past year MCHP had a positive cash flow from operations.
In the past 5 years MCHP has always been profitable.
Each year in the past 5 years MCHP had a positive operating cash flow.
1.2 Ratios
The Return On Assets of MCHP (5.00%) is better than 62.96% of its industry peers.
With a decent Return On Equity value of 12.45%, MCHP is doing good in the industry, outperforming 73.15% of the companies in the same industry.
MCHP's Return On Invested Capital of 7.26% is fine compared to the rest of the industry. MCHP outperforms 72.22% of its industry peers.
MCHP had an Average Return On Invested Capital over the past 3 years of 14.53%. This is above the industry average of 11.96%.
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
MCHP has a Profit Margin of 14.22%. This is in the better half of the industry: MCHP outperforms 67.59% of its industry peers.
In the last couple of years the Profit Margin of MCHP has grown nicely.
The Operating Margin of MCHP (20.68%) is better than 77.78% of its industry peers.
In the last couple of years the Operating Margin of MCHP has grown nicely.
Looking at the Gross Margin, with a value of 60.32%, MCHP belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
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
MCHP has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it 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
An Altman-Z score of 3.16 indicates that MCHP is not in any danger for bankruptcy at the moment.
MCHP has a Altman-Z score (3.16) which is comparable to the rest of the industry.
The Debt to FCF ratio of MCHP is 4.25, which is a neutral value as it means it would take MCHP, 4.25 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of MCHP (4.25) is better than 60.19% of 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.
Looking at the Debt to Equity ratio, with a value of 0.71, MCHP is doing worse than 80.56% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.71 | ||
| Debt/FCF | 4.25 | ||
| Altman-Z | 3.16 |
ROIC/WACC0.52
WACC13.93%
2.3 Liquidity
A Current Ratio of 0.88 indicates that MCHP may have some problems paying its short term obligations.
MCHP's Current ratio of 0.88 is on the low side compared to the rest of the industry. MCHP is outperformed by 92.59% of its industry peers.
A Quick Ratio of 0.48 indicates that MCHP may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.48, MCHP is doing worse than 93.52% of the companies in the same industry.
| 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%.
The Earnings Per Share has been growing by 8.40% on average over the past years. This is quite good.
MCHP shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -38.55%.
The Revenue has been growing slightly by 7.37% on average over the past years.
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
The Earnings Per Share is expected to grow by 3.26% on average over the next years.
The Revenue is expected to grow by 1.46% on average over the next years.
EPS Next Y-66.64%
EPS Next 2Y-28.69%
EPS Next 3Y-7.06%
EPS Next 5Y3.26%
Revenue Next Year-40.48%
Revenue Next 2Y-16.71%
Revenue Next 3Y-4.6%
Revenue Next 5Y1.46%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
MCHP is valuated rather expensively with a Price/Earnings ratio of 22.21.
78.70% of the companies in the same industry are more expensive than MCHP, based on the Price/Earnings ratio.
MCHP is valuated rather cheaply when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 23.49, MCHP is valued on the expensive side.
Based on the Price/Forward Earnings ratio, MCHP is valued a bit cheaper than the industry average as 72.22% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of MCHP to the average of the S&P500 Index (24.44), we can say MCHP is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.21 | ||
| Fwd PE | 23.49 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of MCHP indicates a somewhat cheap valuation: MCHP is cheaper than 72.22% of the companies listed in the same industry.
MCHP's Price/Free Cash Flow ratio is rather cheap when compared to the industry. MCHP is cheaper than 87.96% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.85 | ||
| EV/EBITDA | 19.25 |
4.3 Compensation for Growth
The excellent profitability rating of MCHP may justify a higher PE ratio.
MCHP's earnings are expected to decrease with -7.06% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)2.64
EPS Next 2Y-28.69%
EPS Next 3Y-7.06%
5. Dividend
5.1 Amount
MCHP has a Yearly Dividend Yield of 3.24%.
The stock price of MCHP dropped by -23.31% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
Compared to an average industry Dividend Yield of 2.28, MCHP pays a better dividend. On top of this MCHP pays more dividend than 95.37% of the companies listed in the same industry.
MCHP's Dividend Yield is a higher than the S&P500 average which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.24% |
5.2 History
On average, the dividend of MCHP grows each year by 18.25%, which is quite nice.
MCHP has been paying a dividend for at least 10 years, so it has 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 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-28.69%
EPS Next 3Y-7.06%
MICROCHIP TECHNOLOGY INC
NASDAQ:MCHP (1/22/2025, 10:46:06 AM)
58.6441
+0.13 (+0.23%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners97.19%
Inst Owner Change0.6%
Ins Owners2.07%
Ins Owner Change6.28%
Market Cap31.49B
Analysts78.71
Price Target85.56 (45.9%)
Short Float %6.45%
Short Ratio4.08
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.24% |
Yearly Dividend1.69
Dividend Growth(5Y)18.25%
DP123.62%
Div Incr Years13
Div Non Decr Years13
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)2.42%
Min EPS beat(2)-0.01%
Max EPS beat(2)4.85%
EPS beat(4)2
Avg EPS beat(4)1.04%
Min EPS beat(4)-2.65%
Max EPS beat(4)4.85%
EPS beat(8)2
Avg EPS beat(8)-0.21%
EPS beat(12)4
Avg EPS beat(12)0.28%
EPS beat(16)7
Avg EPS beat(16)0.54%
Revenue beat(2)0
Avg Revenue beat(2)-1.49%
Min Revenue beat(2)-2.03%
Max Revenue beat(2)-0.95%
Revenue beat(4)0
Avg Revenue beat(4)-1.9%
Min Revenue beat(4)-2.39%
Max Revenue beat(4)-0.95%
Revenue beat(8)0
Avg Revenue beat(8)-1.87%
Revenue beat(12)0
Avg Revenue beat(12)-1.62%
Revenue beat(16)0
Avg Revenue beat(16)-1.61%
PT rev (1m)-1.33%
PT rev (3m)-10.02%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-62.61%
EPS NY rev (1m)0%
EPS NY rev (3m)-19.51%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-31.2%
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)-7.09%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.21 | ||
| Fwd PE | 23.49 | ||
| P/S | 5.73 | ||
| P/FCF | 20.85 | ||
| P/OCF | 18.48 | ||
| P/B | 5.02 | ||
| P/tB | N/A | ||
| EV/EBITDA | 19.25 |
EPS(TTM)2.64
EY4.5%
EPS(NY)2.5
Fwd EY4.26%
FCF(TTM)2.81
FCFY4.8%
OCF(TTM)3.17
OCFY5.41%
SpS10.24
BVpS11.69
TBVpS-5.7
PEG (NY)N/A
PEG (5Y)2.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5% | ||
| ROE | 12.45% | ||
| ROCE | 9.22% | ||
| ROIC | 7.26% | ||
| ROICexc | 7.43% | ||
| ROICexgc | 32.99% | ||
| OM | 20.68% | ||
| PM (TTM) | 14.22% | ||
| GM | 60.32% | ||
| FCFM | 27.48% |
ROA(3y)11.21%
ROA(5y)7.8%
ROE(3y)28.27%
ROE(5y)20.31%
ROIC(3y)14.53%
ROIC(5y)10.53%
ROICexc(3y)14.84%
ROICexc(5y)10.75%
ROICexgc(3y)59.35%
ROICexgc(5y)46.01%
ROCE(3y)18.45%
ROCE(5y)13.37%
ROICexcg growth 3Y18.42%
ROICexcg growth 5Y15.98%
ROICexc growth 3Y39.37%
ROICexc growth 5Y32.47%
OM growth 3Y22.16%
OM growth 5Y19.11%
PM growth 3Y57.24%
PM growth 5Y30.29%
GM growth 3Y1.74%
GM growth 5Y3.61%
F-Score4
Asset Turnover0.35
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.71 | ||
| Debt/FCF | 4.25 | ||
| Debt/EBITDA | 2.29 | ||
| Cap/Depr | 23.75% | ||
| Cap/Sales | 3.52% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.35% | ||
| Profit Quality | 193.28% | ||
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.48 | ||
| Altman-Z | 3.16 |
F-Score4
WACC13.93%
ROIC/WACC0.52
Cap/Depr(3y)37.83%
Cap/Depr(5y)25.41%
Cap/Sales(3y)4.97%
Cap/Sales(5y)3.58%
Profit Quality(3y)156.39%
Profit Quality(5y)249.98%
High Growth Momentum
Growth
EPS 1Y (TTM)-59.13%
EPS 3Y14.22%
EPS 5Y8.4%
EPS Q2Q%-71.6%
EPS Next Y-66.64%
EPS Next 2Y-28.69%
EPS Next 3Y-7.06%
EPS Next 5Y3.26%
Revenue 1Y (TTM)-38.55%
Revenue growth 3Y11.97%
Revenue growth 5Y7.37%
Sales Q2Q%-48.37%
Revenue Next Year-40.48%
Revenue Next 2Y-16.71%
Revenue Next 3Y-4.6%
Revenue Next 5Y1.46%
EBIT growth 1Y-67.14%
EBIT growth 3Y36.78%
EBIT growth 5Y27.89%
EBIT Next Year-50.25%
EBIT Next 3Y-3.44%
EBIT Next 5Y6.3%
FCF growth 1Y-45.99%
FCF growth 3Y12.65%
FCF growth 5Y12.52%
OCF growth 1Y-47.32%
OCF growth 3Y14.71%
OCF growth 5Y11.55%