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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Microchip Technology Incorporated (XNAS:MCHP) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MCHP
Name:
MICROCHIP TECHNOLOGY INCORPORATED (XNAS:MCHP)
Sector:
543.60M
Industry:
Semiconductors
CEO:
Mr. Steve Sanghi
Total Employees:
21,000
Our Technological Advancement Rating
Our Rating:
A+
Technological advancement compared to industry is 580.82% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MICROCHIP TECHNOLOGY INCORPORATED(MCHP) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SEMICONDUCTORS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
64.5
One Month Price Target:
$65.08
Six Month Price Target :
$68.
Likely Price in One Year's Time:
Ticker:
$71.5
Likely Trading Range Today Under (Normal Volatility)
$64.22
Price Upper limit ($) :
$64.9
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$60.44
This week:
$55.43
This month :
$46.36
Other Primary facts
Market Cap:
35.22B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
552.48M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
15.59%
-20.29%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$83.32
$74.64
$45.68
$54.36
Medium risk (<10%) entry points
Buy Call
Sell Call
$71.81
Buy Put:
Sell Put:
$69.96
$57.16
$59.04
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MCHP
Sharpe Ratio:
2.50%
Comparison:
MCHP, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is -19.31% lower than the industry
& ratio is 9.62% higher than the market/S&P 500 average
Average Returns/Yield of
MCHP
Daily returns:
0.09%
Weekly returns:
0.43%
Monthly returns:
1.73%
Yearly returns:
31.95%
Comparison of returns:
Average annual returns/yield (last 3 years) is -35.08% below industry average
Classification:
MCHP, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.68
Statistical test of Returns:
MCHP has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.10%
Weekly Volatility:
6.94%
Monthly Volatility:
13.88%
Yearly Volatility:
48.09%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.59%
Volatility in last five trading days has been -80.86% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.29%
Weekly VaR:
-14.06%
Monthly VaR:
-28.13%
How Much Can the price of
MCHP
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-24%
Worst case (decline):
>85%
This translates to price declining to:
$49.10
This translates to price declining to:
$9.68
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
MCHP is a 98.52% riskier investment compared to the market/S&P 500 & is 70.07% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -12.53% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MCHP
Beta in relation to market/S&P 500--1.62
Expected beta in 1 year's time:
1.023
Expected beta in 3 year's time:
1.446
Unlevered (debt free) Beta:
0.69
Beta in relation to Nasdaq (XNAS):
1.365
Beta in relation to all global stocks::
1.08
Beta Comparison & Analysis
Beta of competitors/peers::
1.116
Beta is 44.77% higher than peers
Average Industry Beta:
1.41
Beta is 14.53% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
8.20%
Sustainable growth rate is -70.33% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.065
Alpha is -65.90% below industry average alpha yield
Alpha is 415% higher than market/& is unsustainably high
Analysis of Cost of Capital of
MCHP
Equity cost of capital:
0.142
Equity cost of capital is 10.96% above industry mean WACC
Unlevered (without debt) cost of capital:
6.08%
Before-tax cost of debt:
2.33%
After-tax cost of debt:
1.84%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.84%
WACC is -26.02% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$12.35
Revenue growth rate per share of (3Y):
6.46
Annual revenue growth rate is -23.38% below industry average
EPS:
$2.27
Expected Annual growth rate of EPS (3Y):
36.26%
Expected future EPS growth rate is -30.46% lower than the Semiconductors industry
Free cash flow (FCF) per share:
$4.60
Balance sheet equity growth per share: 3.22%
Equity growth rate per share is -77.27% lower than the industry
Debt per share
$15.43
EBITDA per share
$4.97
Valuation Analysis Today of
MCHP
P/E Ratio:
20.44
P/E Ratio of Competitors/Peers:
821.13
P/E ratio is -97.51% lower than main peers & is -50.71% lower than the industry
Stock price/value with industry average P/E ratio: $94.15
MCHP is -31.49% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $78.38
Present value of the expected future dividends only: $7.75
P/S (Price to Sales ratio):
5.22
Price to sales ratio is -35.72% below the industry mean
P/B (Price to book value ratio):
6.46
Price to free cash flow: 14.01
Price to free cash flow ratio is -71.14% lower than the industry
Net income growth rate (3Y):
22.73%
Net income growth rate is -139.69% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 8.80%
Dividend yeild: 1.86%
Previous Dividend: $0.28
Previous adjusted dividend: $0.28
Previous Dividend: $1.20
Expected next dividend best case: $0.33
Expected next dividend worst case: $0.22
Average dividend payment (long-term): $0.35
Average dividend increase/decrease (growth rate) % per period: -1.07%
Expected next dividend payment date: 09/01/2022
Expected next dividend record date: 18/08/2022
Expected next dividend declaration date: 08/08/2022
Previous dividend payment date: 06/03/2022
Previous dividend record date: 20/05/2022
Previous dividend declaration date: 05/09/2022
Dividend History:
2022-05-19--$0.28
2021-11-18--$0.23
2021-05-20--$0.21
2022-02-18--$0.25
2021-08-19--$0.22
2021-02-19--$0.20
Dividend growth rate is -140.30% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
154.48%
Net debt to equity ratio:
150.14%
Debt to assets ratio:
52.39%
Net debt to assets ratio:
50.91%
Debt-to-asset ratio is 34.39% above industry average
Ability to repay debt:
Interest coverage ratio:
13.79
Interest coverage ratio is -57.93% less than industry average
Looking forward:
Debt growth rate:
-4.35%
Annual debt growth is -105% lower than industry average debt growth rate
Debt repayment rate in last quarter: 20.23%
Analysis of Key Statistics
Correlation of price movement with the market:
0.783
Statistical significance of correlation:
MCHP has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.627
Stock price is 24.77% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.627
Correlation of price movement with Nasdaq (^IXIC):
-0.006
Covariance of price movement with the market:
-0.01
Kurtosis
5.66
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.121
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
MCHP
Gross Profit Margin Ratio:
261%
Operating Profit Margin Ratio:
27.12%
Operating profit margin is 15.25% higher than the industry
Net Profit Margin Ratio:
261%
Effective Tax Rate:
13.29%
Effective tax rate is -11.94% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
23.29%
Return on equity (ROE) is -18.56% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
7.90%
Return on assets (ROA) is -40.01% lower than the industry
Financial Leverage:
2.1x
Current Ratio:
1.98
Current ratio is -51.23% below industry average
Cash Conversion Cycle (days):
34.8
Cash conversion cycle is -36.86% below industry average
The remaining useful life of property plant & equipment is: 8.1 years
Stock based compensation to net income ratio:
4.40%
In-depth Efficiency Analysis
Revenue generated per employee:
324.8K
Each employee generates -48% less revenue than industry average revenue per employee
EBITDA generated per employee:
130.8K
Each employee generates -44% less EBITDA than industry average revenue per employee
Profit generated per employee:
61.2K
Each employee generates -62% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
25.9K
Each employee generates -7% less free cash flow than industry average revenue per employee
Assets/Capital per employee
672.4K
Each employee generates -7% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- -4.72%
Growth rate in R&D investment/expenditure is -133.31% lower than the industry
Competitors/Peer firms of
MCHP
CADENCE DESIGN SYSTEMS, INC. (XNAS:CDNS)
DATADOG, INC. (XNAS:DDOG)
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION (XNAS:CTSH)
XILINX, INC. (XNAS:XLNX)
THE TRADE DESK, INC. (XNAS:TTD)
SYNOPSYS, INC. (XNAS:SNPS)
FORTINET, INC. (XNAS:FTNT)
Telefonaktiebolaget LM Ericsson (XNAS:ERIC)
ZSCALER, INC. (XNAS:ZS)
Current Analyst Ratings
Strong buy�25%
Buy�25%
Hold�21%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
6.82B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
2.37B
4.45B
989.10M
-
718.90M
-
862.50M
2.57B
500.00K
199.20M
1.07B
2.75B
1.85B
1.29B
1.48B
197.00M
1.29B
Statement of Cash Flow
Date:
Period:
272.20M
Differed Income Tax :
20.10M
Stock Based Compensation :
56.60M
Change in Working Capital :
10.90M
Accounts Receivables:
- 3000.00K
Other Working Capital:
27.50M
Other Non-Cash Items:
17.30M
Net Cash Provided by Operating Activities:
629.90M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
6/30/21
2022
Q1
277.70M
2.00M
279.70M
1.00B
683.80M
192.90M
2.16B
892.20M
6.67B
4.58B
-
1.72B
257.00M
14.12B
-
16.28B
284.40M
38.00M
50.90M
-
766.70M
1.09B
8.53B
1.10B
9.67B
-
10.76B
300.00K
3.53B
- 26200.0K
2.01B
June 30, 2021 at 6:00:00 AM
4.94B
5.52B
16.28B
-
8.57B
8.3B
-
- 112700.00K
- 112700.00K
- 2163200.00K
12.20M
-
- 113100.00K
1.74B
- 519500.00K
-
- 2300.00K
277.70M
280.00M
629.90M
- 86300.00K
543.60M
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
MCHP
2023
2024
2025
2026
2027
$71.86
$770.93
$854.62
$947.38
$1,050.22