Back to top

Image: Bigstock

Microchip Technology (MCHP) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

In the latest trading session, Microchip Technology (MCHP - Free Report) closed at $87.13, marking a +0.58% move from the previous day. This move lagged the S&P 500's daily gain of 0.96%. Elsewhere, the Dow gained 0.61%, while the tech-heavy Nasdaq lost 0.04%.

Coming into today, shares of the chipmaker had gained 3.75% in the past month. In that same time, the Computer and Technology sector lost 1.81%, while the S&P 500 lost 0.21%.

Microchip Technology will be looking to display strength as it nears its next earnings release. In that report, analysts expect Microchip Technology to post earnings of $1.17 per share. This would mark year-over-year growth of 44.44%. Our most recent consensus estimate is calling for quarterly revenue of $1.75 billion, up 29.11% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.42 per share and revenue of $6.73 billion, which would represent changes of +33.94% and +23.77%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for Microchip Technology. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.8% higher. Microchip Technology is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, Microchip Technology is currently trading at a Forward P/E ratio of 19.62. Its industry sports an average Forward P/E of 25.5, so we one might conclude that Microchip Technology is trading at a discount comparatively.

We can also see that MCHP currently has a PEG ratio of 1.03. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Semiconductor - Analog and Mixed was holding an average PEG ratio of 1.66 at yesterday's closing price.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 8, putting it in the top 4% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Microchip Technology Incorporated (MCHP) - free report >>

Published in