MICROCHIP TECHNOLOGY INC (MCHP) Stock Fundamental Analysis
NASDAQ:MCHP - Nasdaq - US5950171042 - Common Stock - Currency: USD
MCHP gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 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 on the other hand it scores bad on growth. Finally MCHP also has an excellent dividend rating.
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.
Each year in the past 5 years MCHP has 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 (1.98%) is comparable to the rest of the industry.
The Return On Equity of MCHP (5.12%) is comparable to the rest of the industry.
MCHP has a Return On Invested Capital (3.53%) which is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for MCHP is above the industry average of 11.14%.
The last Return On Invested Capital (3.53%) 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 | 1.98% | ||
| ROE | 5.12% | ||
| ROIC | 3.53% |
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 (6.49%) which is comparable to the rest of the industry.
MCHP's Profit Margin has improved in the last couple of years.
MCHP's Operating Margin of 13.47% is fine compared to the rest of the industry. MCHP outperforms 70.64% 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 57.95%, MCHP belongs to the top of the industry, outperforming 83.49% of the companies in the same industry.
In the last couple of years the Gross Margin of MCHP has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 13.47% | ||
| PM (TTM) | 6.49% | ||
| GM | 57.95% |
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
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so MCHP is still creating some value.
MCHP has less shares outstanding than it did 1 year ago.
The number of shares outstanding for MCHP has been increased compared to 5 years ago.
MCHP has a better debt/assets ratio than last year.
2.2 Solvency
MCHP has an Altman-Z score of 2.42. This is not the best score and indicates that MCHP is in the grey zone with still only limited risk for bankruptcy at the moment.
MCHP has a Altman-Z score (2.42) which is comparable to the rest of the industry.
The Debt to FCF ratio of MCHP is 6.96, which is on the high side as it means it would take MCHP, 6.96 years of fcf income to pay off all of its debts.
MCHP has a Debt to FCF ratio (6.96) which is in line with its industry peers.
MCHP has a Debt/Equity ratio of 1.12. This is a high value indicating a heavy dependency on external financing.
MCHP has a worse Debt to Equity ratio (1.12) than 88.07% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 6.96 | ||
| Altman-Z | 2.42 |
ROIC/WACC0.34
WACC10.24%
2.3 Liquidity
A Current Ratio of 2.25 indicates that MCHP has no problem at all paying its short term obligations.
With a Current ratio value of 2.25, MCHP is not doing good in the industry: 67.89% of the companies in the same industry are doing better.
MCHP has a Quick Ratio of 1.23. This is a normal value and indicates that MCHP is financially healthy and should not expect problems in meeting its short term obligations.
MCHP has a Quick ratio of 1.23. This is in the lower half of the industry: MCHP underperforms 78.90% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.25 | ||
| Quick Ratio | 1.23 |
3. Growth
3.1 Past
The earnings per share for MCHP have decreased strongly by -70.57% in the last year.
MCHP shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.40% yearly.
MCHP shows a very negative growth in Revenue. In the last year, the Revenue has decreased by -44.31%.
MCHP shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.37% yearly.
EPS 1Y (TTM)-70.57%
EPS 3Y14.22%
EPS 5Y8.4%
EPS Q2Q%-81.48%
Revenue 1Y (TTM)-44.31%
Revenue growth 3Y11.97%
Revenue growth 5Y7.37%
Sales Q2Q%-41.89%
3.2 Future
The Earnings Per Share is expected to decrease by -2.19% on average over the next years.
The Revenue is expected to decrease by -1.20% on average over the next years.
EPS Next Y-72.93%
EPS Next 2Y-47.85%
EPS Next 3Y-18.88%
EPS Next 5Y-2.19%
Revenue Next Year-42.45%
Revenue Next 2Y-23.35%
Revenue Next 3Y-9.54%
Revenue Next 5Y-1.2%
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 decreasing.
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
With a Price/Earnings ratio of 21.91, MCHP is valued on the expensive side.
Based on the Price/Earnings ratio, MCHP is valued a bit cheaper than the industry average as 67.89% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 28.29. MCHP is valued slightly cheaper when compared to this.
The Price/Forward Earnings ratio is 28.88, which means the current valuation is very expensive for MCHP.
The rest of the industry has a similar Price/Forward Earnings ratio as MCHP.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.08, MCHP is valued a bit more expensive.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.91 | ||
| Fwd PE | 28.88 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MCHP is valued a bit cheaper than 63.30% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of MCHP indicates a rather cheap valuation: MCHP is cheaper than 81.65% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.37 | ||
| EV/EBITDA | 18.92 |
4.3 Compensation for Growth
The decent profitability rating of MCHP may justify a higher PE ratio.
MCHP's earnings are expected to decrease with -18.88% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)2.61
EPS Next 2Y-47.85%
EPS Next 3Y-18.88%
5. Dividend
5.1 Amount
MCHP has a Yearly Dividend Yield of 4.69%, which is a nice return.
In the last 3 months the price of MCHP has falen by -33.48%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
MCHP's Dividend Yield is rather good when compared to the industry average which is at 3.10. MCHP pays more dividend than 94.50% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.57, MCHP pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.69% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)18.25%
Div Incr Years13
Div Non Decr Years13
5.3 Sustainability
315.22% of the earnings are spent on dividend by MCHP. This is not a sustainable payout ratio.
MCHP's earnings are declining while the Dividend Rate has been growing. This means the dividend growth is most likely not sustainable.
DP315.22%
EPS Next 2Y-47.85%
EPS Next 3Y-18.88%
38.56
+0.61 (+1.61%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners99.38%
Inst Owner Change0%
Ins Owners1.92%
Ins Owner Change0.75%
Market Cap20.74B
Analysts78.67
Price Target66.83 (73.31%)
Short Float %6.38%
Short Ratio3.39
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.69% |
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)2.76%
PT rev (3m)-21.89%
EPS NQ rev (1m)0.26%
EPS NQ rev (3m)-67.28%
EPS NY rev (1m)1.46%
EPS NY rev (3m)-18.85%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-11.69%
Revenue NY rev (1m)-0.09%
Revenue NY rev (3m)-3.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 21.91 | ||
| Fwd PE | 28.88 | ||
| P/S | 4.36 | ||
| P/FCF | 21.37 | ||
| P/OCF | 18.48 | ||
| P/B | 3.44 | ||
| P/tB | N/A | ||
| EV/EBITDA | 18.92 |
EPS(TTM)1.76
EY4.56%
EPS(NY)1.34
Fwd EY3.46%
FCF(TTM)1.8
FCFY4.68%
OCF(TTM)2.09
OCFY5.41%
SpS8.84
BVpS11.21
TBVpS-5.9
PEG (NY)N/A
PEG (5Y)2.61
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.98% | ||
| ROE | 5.12% | ||
| ROCE | 4.48% | ||
| ROIC | 3.53% | ||
| ROICexc | 3.68% | ||
| ROICexgc | 11.18% | ||
| OM | 13.47% | ||
| PM (TTM) | 6.49% | ||
| GM | 57.95% | ||
| FCFM | 20.4% |
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-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 | 2.42 |
F-Score5
WACC10.24%
ROIC/WACC0.34
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)-70.57%
EPS 3Y14.22%
EPS 5Y8.4%
EPS Q2Q%-81.48%
EPS Next Y-72.93%
EPS Next 2Y-47.85%
EPS Next 3Y-18.88%
EPS Next 5Y-2.19%
Revenue 1Y (TTM)-44.31%
Revenue growth 3Y11.97%
Revenue growth 5Y7.37%
Sales Q2Q%-41.89%
Revenue Next Year-42.45%
Revenue Next 2Y-23.35%
Revenue Next 3Y-9.54%
Revenue Next 5Y-1.2%
EBIT growth 1Y-79.8%
EBIT growth 3Y36.78%
EBIT growth 5Y27.89%
EBIT Next Year-55.97%
EBIT Next 3Y-9.72%
EBIT Next 5Y6.3%
FCF growth 1Y-69.4%
FCF growth 3Y12.65%
FCF growth 5Y12.52%
OCF growth 1Y-69.33%
OCF growth 3Y14.71%
OCF growth 5Y11.55%