Back to top

Image: Bigstock

Microchip Technology (MCHP) Dips More Than Broader Markets: What You Should Know

Read MoreHide Full Article

In the latest trading session, Microchip Technology (MCHP - Free Report) closed at $80.71, marking a -1.87% move from the previous day. This change lagged the S&P 500's daily loss of 1.1%. Elsewhere, the Dow lost 1.19%, while the tech-heavy Nasdaq lost 3.27%.

Prior to today's trading, shares of the chipmaker had lost 2.82% over the past month. This has lagged the Computer and Technology sector's gain of 1.45% and was narrower than the S&P 500's loss of 3.02% in that time.

Wall Street will be looking for positivity from Microchip Technology as it approaches its next earnings report date. On that day, Microchip Technology is projected to report earnings of $1.62 per share, which would represent year-over-year growth of 20%. Meanwhile, our latest consensus estimate is calling for revenue of $2.22 billion, up 20.42% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6 per share and revenue of $8.43 billion. These totals would mark changes of +30.15% and +23.54%, respectively, from last year.

Investors should also note any 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.21% higher. Microchip Technology currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, Microchip Technology is holding a Forward P/E ratio of 13.7. For comparison, its industry has an average Forward P/E of 17.6, which means Microchip Technology is trading at a discount to the group.

Investors should also note that MCHP has a PEG ratio of 0.81 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Semiconductor - Analog and Mixed was holding an average PEG ratio of 1.44 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 87, putting it in the top 35% 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.

To follow MCHP in the coming trading sessions, be sure to utilize

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