Now trading at a price of $76.09, Microchip Technology has moved -1.5% so far today.
Microchip Technology returned losses of -8.4% last year, with its stock price reaching a high of $100.57 and a low of $68.75. Over the same period, the stock underperformed the S&P 500 index by -27.4%. AThe company's 50-day average price was $89.54. Microchip Technology Incorporated engages in the development, manufacture, and sale of smart, connected, and secure embedded control solutions in the Americas, Europe, and Asia. Based in Chandler, AZ, the Large-Cap Technology company has 22,300 full time employees. Microchip Technology has offered a 2.3% dividend yield over the last 12 months.
Wider Gross Margins Than the Industry Average of 41.67%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $5,350 | $5,274 | $5,438 | $6,821 | $8,439 | $7,634 |
| Gross Margins | 55% | 61% | 62% | 65% | 68% | 65% |
| Net Margins | 7% | 11% | 6% | 19% | 27% | 25% |
| Net Income (M) | $356 | $571 | $349 | $1,286 | $2,238 | $1,907 |
| Net Interest Expense (M) | $503 | $497 | $357 | $257 | $204 | $198 |
| Depreciation & Amort. (M) | $876 | $1,216 | $1,153 | $1,144 | $998 | $880 |
| Diluted Shares (M) | 517 | 551 | 567 | 555 | 546 | 548 |
| Earnings Per Share | $0.69 | $1.04 | $0.62 | $2.31 | $4.09 | $3.48 |
| EPS Growth | n/a | 50.72% | -40.38% | 272.58% | 77.06% | -14.91% |
| Avg. Price | $39.79 | $42.37 | $49.48 | $74.34 | $68.7 | $76.09 |
| P/E Ratio | 53.05 | 36.53 | 77.31 | 32.04 | 16.76 | 21.43 |
| Free Cash Flow (M) | $1,656 | $1,476 | $1,824 | $2,473 | $3,135 | $2,608 |
| CAPEX (M) | $19 | $68 | $93 | $370 | $486 | $285 |
| EV / EBITDA | 18.53 | 16.2 | 16.71 | 15.88 | 10.76 | 13.78 |
| Total Debt (M) | $10,941 | $9,750 | $9,191 | $6,589 | $7,094 | $6,999 |
| Net Debt / EBITDA | 6.63 | 5.04 | 4.13 | 2.1 | 1.66 | 1.94 |
| Current Ratio | 0.9 | 0.85 | 1.81 | 1.76 | 0.98 | 1.2 |
Microchip Technology benefits from growing revenues and increasing reinvestment in the business, exceptional EPS growth, and generally positive cash flows. The company's financial statements show wider gross margins than its peer group and healthy leverage levels. Furthermore, Microchip Technology has just enough current assets to cover current liabilities, as shown by its current ratio of 1.2.
Forward Earnings Expected to Increase but Its Shares Are Expensive:
Microchip Technology has a trailing twelve month P/E ratio of 35.7, compared to an average of 31.58 for the Technology sector. Based on its EPS guidance of $3.42, the company has a forward P/E ratio of 26.2. According to the 25.7% compound average growth rate of Microchip Technology's historical and projected earnings per share, the company's PEG ratio is 1.39. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 15.5%. On this basis, the company's PEG ratio is 2.3. This suggests that these shares are overvalued. Furthermore, Microchip Technology is likely overvalued compared to the book value of its equity, since its P/B ratio of 6.37 is higher than the sector average of 4.11. The company's shares are currently trading 146.7% below their Graham number. Ultimately, Microchip Technology's strong cash flows, decent earnings multiple, and healthy debt levels factor towards it being fairly valued, its elevated P/B ratio notwithstanding.
There's an Analyst Consensus of Strong Upside Potential for Microchip Technology:
The 22 analysts following Microchip Technology have set target prices ranging from $80.0 to $105.0 per share, for an average of $95.52 with a buy rating. The company is trading -20.3% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Microchip Technology has an average amount of shares sold short because 5.6% of the company's shares are sold short. Institutions own 97.2% of the company's shares, and the insider ownership rate stands at 2.1%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 13% stake in the company is worth $5,218,535,231.
