MICROCHIP TECHNOLOGY INC (MCHP)
US5950171042 - Common Stock
Overall MCHP gets a fundamental rating of 6 out of 10. We evaluated MCHP against 107 industry peers in the Semiconductors & Semiconductor Equipment industry. MCHP scores excellent on profitability, but there are some minor concerns on its financial health. MCHP has a correct valuation and a medium growth rate. 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.
In the past 5 years MCHP has always been profitable.
MCHP had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 14.60%, MCHP belongs to the top of the industry, outperforming 84.91% of the companies in the same industry.
MCHP has a better Return On Equity (33.28%) than 92.45% of its industry peers.
MCHP has a Return On Invested Capital of 20.20%. This is amongst the best in the industry. MCHP outperforms 93.40% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for MCHP is in line with the industry average of 10.73%.
The last Return On Invested Capital (20.20%) for MCHP is above the 3 year average (11.80%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.6% | ||
| ROE | 33.28% | ||
| ROIC | 20.2% |
ROA(3y)7.91%
ROA(5y)5.79%
ROE(3y)20.9%
ROE(5y)15.93%
ROIC(3y)11.8%
ROIC(5y)8.57%
1.3 Margins
Looking at the Profit Margin, with a value of 27.59%, MCHP belongs to the top of the industry, outperforming 90.57% of the companies in the same industry.
In the last couple of years the Profit Margin of MCHP has grown nicely.
The Operating Margin of MCHP (37.14%) is better than 93.40% of its industry peers.
MCHP's Operating Margin has improved in the last couple of years.
With an excellent Gross Margin value of 67.03%, MCHP belongs to the best of the industry, outperforming 87.74% of the companies in the same industry.
MCHP's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 37.14% | ||
| PM (TTM) | 27.59% | ||
| GM | 67.03% |
OM growth 3Y41%
OM growth 5Y9.01%
PM growth 3Y34.83%
PM growth 5Y32.82%
GM growth 3Y3.18%
GM growth 5Y2.12%
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.
MCHP has less shares outstanding than it did 1 year ago.
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 4.94 indicates that MCHP is not in any danger for bankruptcy at the moment.
MCHP has a Altman-Z score (4.94) which is comparable to the rest of the industry.
The Debt to FCF ratio of MCHP is 2.02, which is a good value as it means it would take MCHP, 2.02 years of fcf income to pay off all of its debts.
MCHP has a Debt to FCF ratio of 2.02. This is in the better half of the industry: MCHP outperforms 70.75% of its industry peers.
MCHP has a Debt/Equity ratio of 0.57. This is a neutral value indicating MCHP is somewhat dependend on debt financing.
MCHP has a Debt to Equity ratio of 0.57. This is in the lower half of the industry: MCHP underperforms 75.47% of its industry peers.
Even though the debt/equity ratio score it not favorable for MCHP, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.57 | ||
| Debt/FCF | 2.02 | ||
| Altman-Z | 4.94 |
ROIC/WACC1.73
WACC11.66%
2.3 Liquidity
MCHP has a Current Ratio of 0.98. This is a bad value and indicates that MCHP is not financially healthy enough and could expect problems in meeting its short term obligations.
MCHP has a worse Current ratio (0.98) than 92.45% of its industry peers.
A Quick Ratio of 0.58 indicates that MCHP may have some problems paying its short term obligations.
MCHP has a Quick ratio of 0.58. This is amonst the worse of the industry: MCHP underperforms 92.45% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.98 | ||
| Quick Ratio | 0.58 |
3. Growth
3.1 Past
MCHP shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 4.18%.
Measured over the past years, MCHP shows a quite strong growth in Earnings Per Share. The EPS has been growing by 17.09% on average per year.
The Revenue has been growing slightly by 6.10% in the past year.
MCHP shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 16.21% yearly.
EPS 1Y (TTM)4.18%
EPS 3Y28.98%
EPS 5Y17.09%
EPS growth Q2Q-30.77%
Revenue 1Y (TTM)6.1%
Revenue growth 3Y16.96%
Revenue growth 5Y16.21%
Revenue growth Q2Q-18.6%
3.2 Future
MCHP is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.50% yearly.
Based on estimates for the next years, MCHP will show a small growth in Revenue. The Revenue will grow by 2.97% on average per year.
EPS Next Y-16.97%
EPS Next 2Y-27.27%
EPS Next 3Y-9.68%
EPS Next 5Y3.5%
Revenue Next Year-9.4%
Revenue Next 2Y-15.31%
Revenue Next 3Y-5.49%
Revenue Next 5Y2.97%
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 14.96, MCHP is valued correctly.
Based on the Price/Earnings ratio, MCHP is valued cheaper than 85.85% of the companies in the same industry.
MCHP's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.06.
The Price/Forward Earnings ratio is 28.05, which means the current valuation is very expensive for MCHP.
60.38% of the companies in the same industry are more expensive than MCHP, based on the Price/Forward Earnings ratio.
MCHP is valuated rather expensively when we compare the Price/Forward Earnings ratio to 20.72, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.96 | ||
| Fwd PE | 28.05 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, MCHP is valued cheaply inside the industry as 84.91% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, MCHP is valued cheaper than 89.62% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 17.18 | ||
| EV/EBITDA | 13.1 |
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 -9.68% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)0.88
EPS Next 2Y-27.27%
EPS Next 3Y-9.68%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.95%, MCHP has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 2.07, MCHP pays a better dividend. On top of this MCHP pays more dividend than 90.57% of the companies listed in the same industry.
MCHP's Dividend Yield is comparable with the S&P500 average which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.95% |
5.2 History
The dividend of MCHP is nicely growing with an annual growth rate of 11.69%!
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)11.69%
Div Incr Years12
Div Non Decr Years12
5.3 Sustainability
MCHP pays out 36.71% of its income as dividend. This is a sustainable payout ratio.
MCHP's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP36.71%
EPS Next 2Y-27.27%
EPS Next 3Y-9.68%
MICROCHIP TECHNOLOGY INC
NASDAQ:MCHP (5/2/2024, 7:06:08 PM)
After market: 90.43 +0.97 (+1.08%)89.46
+0.67 (+0.75%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSemiconductors & Semiconductor Equipment
GICS IndustrySemiconductors & Semiconductor Equipment
Earnings (Last)
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Market Cap48.34B
Analysts
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Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.95% |
Dividend Growth(5Y)
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Surprises & Revisions
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.96 | ||
| Fwd PE | 28.05 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
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FCF(TTM)
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OCF(TTM)
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SpS
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PEG (NY)N/A
PEG (5Y)0.88
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 14.6% | ||
| ROE | 33.28% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 37.14% | ||
| PM (TTM) | 27.59% | ||
| GM | 67.03% | ||
| 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 Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.57 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.98 | ||
| Quick Ratio | 0.58 | ||
| 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)
Growth
EPS 1Y (TTM)4.18%
EPS 3Y28.98%
EPS 5Y
EPS growth Q2Q
EPS Next Y-16.97%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)6.1%
Revenue growth 3Y16.96%
Revenue growth 5Y
Revenue growth Q2Q
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Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
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EBIT growth 3Y
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