MICROCHIP TECHNOLOGY INC (MCHP) Stock Fundamental Analysis
NASDAQ:MCHP - Nasdaq - US5950171042 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to MCHP. MCHP was compared to 108 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 expensive valuation and it also 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.
In the past 5 years MCHP always reported a positive cash flow from operatings.
1.2 Ratios
With a Return On Assets value of 1.98%, MCHP perfoms like the industry average, outperforming 52.78% of the companies in the same industry.
MCHP has a Return On Equity (5.12%) which 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.
MCHP had an Average Return On Invested Capital over the past 3 years of 14.53%. This is above the industry average of 11.67%.
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
With a Profit Margin value of 6.49%, MCHP perfoms like the industry average, outperforming 58.33% of the companies in the same industry.
MCHP's Profit Margin has improved in the last couple of years.
MCHP has a Operating Margin of 13.47%. This is in the better half of the industry: MCHP outperforms 70.37% of its industry peers.
In the last couple of years the Operating Margin of MCHP has grown nicely.
MCHP has a Gross Margin of 57.95%. This is amongst the best in the industry. MCHP outperforms 81.48% of its industry peers.
MCHP's Gross Margin has improved in the last couple of years.
| 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
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
Compared to 5 years ago, MCHP has more shares outstanding
Compared to 1 year ago, MCHP has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 3.28 indicates that MCHP is not in any danger for bankruptcy at the moment.
MCHP's Altman-Z score of 3.28 is in line compared to the rest of the industry. MCHP outperforms 50.00% of its industry peers.
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.
MCHP's Debt to FCF ratio of 6.96 is in line compared to the rest of the industry. MCHP outperforms 54.63% of its industry peers.
A Debt/Equity ratio of 1.12 is on the high side and indicates that MCHP has dependencies on debt financing.
MCHP has a worse Debt to Equity ratio (1.12) than 86.11% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.12 | ||
| Debt/FCF | 6.96 | ||
| Altman-Z | 3.28 |
ROIC/WACC0.31
WACC11.32%
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 worse Current ratio (2.25) than 69.44% 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: 81.48% 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 -70.57%.
MCHP shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 8.40% yearly.
Looking at the last year, MCHP shows a very negative growth in Revenue. The Revenue has decreased by -44.31% in the last year.
The Revenue has been growing slightly by 7.37% on average over the past years.
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
Based on estimates for the next years, MCHP will show a small growth in Earnings Per Share. The EPS will grow by 3.26% on average per year.
The Revenue is expected to grow by 1.46% on average over the next years.
EPS Next Y-72.81%
EPS Next 2Y-47.84%
EPS Next 3Y-18.7%
EPS Next 5Y3.26%
Revenue Next Year-40.89%
Revenue Next 2Y-17.74%
Revenue Next 3Y-5.27%
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.
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
Based on the Price/Earnings ratio of 34.70, the valuation of MCHP can be described as expensive.
Based on the Price/Earnings ratio, MCHP is valued a bit cheaper than 62.04% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 29.63, MCHP is valued at the same level.
The Price/Forward Earnings ratio is 45.71, which means the current valuation is very expensive for MCHP.
Compared to the rest of the industry, the Price/Forward Earnings ratio of MCHP is on the same level as its industry peers.
When comparing the Price/Forward Earnings ratio of MCHP to the average of the S&P500 Index (22.68), we can say MCHP is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.7 | ||
| Fwd PE | 45.71 |
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 62.96% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, MCHP is valued a bit cheaper than 75.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.85 | ||
| EV/EBITDA | 28.65 |
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 -18.70% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)4.13
EPS Next 2Y-47.84%
EPS Next 3Y-18.7%
5. Dividend
5.1 Amount
MCHP has a Yearly Dividend Yield of 3.35%.
Compared to an average industry Dividend Yield of 2.34, MCHP pays a better dividend. On top of this MCHP pays more dividend than 94.44% of the companies listed in the same industry.
MCHP's Dividend Yield is a higher than the S&P500 average which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.35% |
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
315.22% of the earnings are spent on dividend by MCHP. This is not a sustainable payout ratio.
MCHP's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP315.22%
EPS Next 2Y-47.84%
EPS Next 3Y-18.7%
61.07
-3.23 (-5.02%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
Earnings (Next)
Inst Owners97.19%
Inst Owner Change-0.49%
Ins Owners2.07%
Ins Owner Change6.28%
Market Cap32.84B
Analysts78.71
Price Target80.51 (31.83%)
Short Float %5.32%
Short Ratio3.06
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.35% |
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)-5.91%
PT rev (3m)-14.3%
EPS NQ rev (1m)-64.97%
EPS NQ rev (3m)-87.34%
EPS NY rev (1m)-18.48%
EPS NY rev (3m)-20.87%
Revenue NQ rev (1m)-11.43%
Revenue NQ rev (3m)-40.63%
Revenue NY rev (1m)-0.69%
Revenue NY rev (3m)-1.75%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 34.7 | ||
| Fwd PE | 45.71 | ||
| P/S | 6.9 | ||
| P/FCF | 33.85 | ||
| P/OCF | 29.27 | ||
| P/B | 5.45 | ||
| P/tB | N/A | ||
| EV/EBITDA | 28.65 |
EPS(TTM)1.76
EY2.88%
EPS(NY)1.34
Fwd EY2.19%
FCF(TTM)1.8
FCFY2.95%
OCF(TTM)2.09
OCFY3.42%
SpS8.84
BVpS11.21
TBVpS-5.9
PEG (NY)N/A
PEG (5Y)4.13
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 | 3.28 |
F-Score5
WACC11.32%
ROIC/WACC0.31
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-72.81%
EPS Next 2Y-47.84%
EPS Next 3Y-18.7%
EPS Next 5Y3.26%
Revenue 1Y (TTM)-44.31%
Revenue growth 3Y11.97%
Revenue growth 5Y7.37%
Sales Q2Q%-41.89%
Revenue Next Year-40.89%
Revenue Next 2Y-17.74%
Revenue Next 3Y-5.27%
Revenue Next 5Y1.46%
EBIT growth 1Y-79.8%
EBIT growth 3Y36.78%
EBIT growth 5Y27.89%
EBIT Next Year-50.84%
EBIT Next 3Y-5.79%
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%