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Microchip's Consistent Results & Good View Drive Shares Up
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Shares of Microchip Technology Inc. (MCHP - Free Report) have outperformed the Zacks Semiconductor Analog & Mixed industry in the last one year. While the stock has surged 56.1%, the industry witnessed an increase of 44.2%. The outperformance is more evident when compared with S&P 500 market that has gained 18.3% in the same period.
The impressive performance of the shares can be attributed to Microchip’s solid earnings results in the last 12 months. We note that the company has beaten the Zacks Consensus Estimates in three of the four trailing quarters with average positive surprise of 12.19%. (Read more: Microchip Beats on Q3 Earnings; Raises Guidance)
Moreover, expanding product portfolio and growing analog business are also key catalysts.
Recently, Microchip narrowed fourth-quarter fiscal 2017 guidance. The company now forecasts non-GAAP net sales to be in the range of down 0.5% to up 2.5% as compared with the earlier guidance range of down 1% to up 3%.
Further, non-GAAP earnings are now expected to be in the range of $1.02–$1.10 per share compared with previous guidance range of $1.01–$1.11 per share.
Microchip Technology Incorporated Price and EPS Surprise
Microchip’s microcontroller business (63.1% of revenues) continues to outperform the industry and has enabled it to gain significant market share. Launch of new innovative products and frequent of updates of existing portfolio are also key growth drivers.
The company recently announced a new product – PIC18F “K42” family – for the high demanding markets of touch sensing, automotive, industrial control, Internet of Things (IoT), medical and white goods.
Microchip also launched hardware cryptography-enabled microcontroller – CEC1702 – to address the growing security needs of IoT applications. The company recently updated the dsPIC digital signal controller (DSC) family, which is suitable for the high-end digital power applications.
Growing Analog & Memory Business
Meanwhile, Microchip plans to develop and produce a wide range of new linear mixed signal, power interface timing and security products to drive future growth of analog business. The company expects the analog business to generate revenues of $1 billion in the long term.
Moreover, the memory business presents growth opportunities based on the expanding portfolio. We note that the newly introduced solution EERAM is a significant addition due to unlimited endurance and safe data storage in case of a power loss.
Positive Estimate Revisions
We note that the Zacks Consensus Estimate for the current year has surged 13.2% to $3.60 per share in the last 30 days, as most of the analysts revised their estimates upward. The earnings figure currently reflects year-over-year growth of 46.1%.
Fiscal 2018 figure have also jumped 16.3% to $4.22 in the same period, with most of the analysts revising their estimates upward.
Texas Instruments (TXN - Free Report) , On Semiconductor (ON - Free Report) and Silicon Laboratories (SLAB - Free Report) are three stocks in the broader sector that carry the same rank as Microchip.
Long-term earnings growth rate for Texas Instruments, On Semiconductor and Silicon Laboratories is pegged at 9.6%, 14.8% and 12.5%, respectively compared with Microchip’s 14.5%.
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Microchip's Consistent Results & Good View Drive Shares Up
Shares of Microchip Technology Inc. (MCHP - Free Report) have outperformed the Zacks Semiconductor Analog & Mixed industry in the last one year. While the stock has surged 56.1%, the industry witnessed an increase of 44.2%. The outperformance is more evident when compared with S&P 500 market that has gained 18.3% in the same period.
The impressive performance of the shares can be attributed to Microchip’s solid earnings results in the last 12 months. We note that the company has beaten the Zacks Consensus Estimates in three of the four trailing quarters with average positive surprise of 12.19%. (Read more: Microchip Beats on Q3 Earnings; Raises Guidance)
Moreover, expanding product portfolio and growing analog business are also key catalysts.
Recently, Microchip narrowed fourth-quarter fiscal 2017 guidance. The company now forecasts non-GAAP net sales to be in the range of down 0.5% to up 2.5% as compared with the earlier guidance range of down 1% to up 3%.
Further, non-GAAP earnings are now expected to be in the range of $1.02–$1.10 per share compared with previous guidance range of $1.01–$1.11 per share.
Microchip Technology Incorporated Price and EPS Surprise
Microchip Technology Incorporated Price and EPS Surprise | Microchip Technology Incorporated Quote
Expanding Portfolio: Key Growth Driver
Microchip’s microcontroller business (63.1% of revenues) continues to outperform the industry and has enabled it to gain significant market share. Launch of new innovative products and frequent of updates of existing portfolio are also key growth drivers.
The company recently announced a new product – PIC18F “K42” family – for the high demanding markets of touch sensing, automotive, industrial control, Internet of Things (IoT), medical and white goods.
Microchip also launched hardware cryptography-enabled microcontroller – CEC1702 – to address the growing security needs of IoT applications. The company recently updated the dsPIC digital signal controller (DSC) family, which is suitable for the high-end digital power applications.
Growing Analog & Memory Business
Meanwhile, Microchip plans to develop and produce a wide range of new linear mixed signal, power interface timing and security products to drive future growth of analog business. The company expects the analog business to generate revenues of $1 billion in the long term.
Moreover, the memory business presents growth opportunities based on the expanding portfolio. We note that the newly introduced solution EERAM is a significant addition due to unlimited endurance and safe data storage in case of a power loss.
Positive Estimate Revisions
We note that the Zacks Consensus Estimate for the current year has surged 13.2% to $3.60 per share in the last 30 days, as most of the analysts revised their estimates upward. The earnings figure currently reflects year-over-year growth of 46.1%.
Fiscal 2018 figure have also jumped 16.3% to $4.22 in the same period, with most of the analysts revising their estimates upward.
Zacks Rank & Other Key Picks
Microchip currently sports a Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.
Texas Instruments (TXN - Free Report) , On Semiconductor (ON - Free Report) and Silicon Laboratories (SLAB - Free Report) are three stocks in the broader sector that carry the same rank as Microchip.
Long-term earnings growth rate for Texas Instruments, On Semiconductor and Silicon Laboratories is pegged at 9.6%, 14.8% and 12.5%, respectively compared with Microchip’s 14.5%.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>