Back to top

Image: Bigstock

Microchip Technology (MCHP) Gains As Market Dips: What You Should Know

Read MoreHide Full Article

Microchip Technology (MCHP - Free Report) closed at $82.84 in the latest trading session, marking a +1.06% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.45%. Elsewhere, the Dow lost 0.04%, while the tech-heavy Nasdaq added 3.58%.

Heading into today, shares of the chipmaker had gained 4.66% over the past month, lagging the Computer and Technology sector's gain of 7.46% and the S&P 500's gain of 5.01% in that time.

Investors will be hoping for strength from Microchip Technology as it approaches its next earnings release. On that day, Microchip Technology is projected to report earnings of $1.64 per share, which would represent year-over-year growth of 19.71%. Meanwhile, our latest consensus estimate is calling for revenue of $2.29 billion, up 16.55% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.23 per share and revenue of $8.81 billion, which would represent changes of +3.49% and +4.45%, respectively, from the prior year.

It is also important to note the 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Microchip Technology is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note Microchip Technology's current valuation metrics, including its Forward P/E ratio of 13.15. This represents a discount compared to its industry's average Forward P/E of 17.99.

We can also see that MCHP currently has a PEG ratio of 0.78. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Semiconductor - Analog and Mixed stocks are, on average, holding a PEG ratio of 1.7 based on yesterday's closing prices.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 206, putting it in the bottom 19% 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