Back to top

Image: Bigstock

Microchip Technology (MCHP) Outpaces Stock Market Gains: What You Should Know

Read MoreHide Full Article

Microchip Technology (MCHP - Free Report) closed at $92.36 in the latest trading session, marking a +1.82% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.85%. Meanwhile, the Dow gained 0.14%, and the Nasdaq, a tech-heavy index, added 5.61%.

Heading into today, shares of the chipmaker had gained 4.7% over the past month, outpacing the Computer and Technology sector's gain of 1.89% and the S&P 500's gain of 3.18% in that time.

Wall Street will be looking for positivity from Microchip Technology as it approaches its next earnings report date. The company is expected to report EPS of $1.64, up 19.71% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $2.29 billion, up 16.55% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.25 per share and revenue of $8.81 billion. These totals would mark changes of +3.82% and +4.45%, respectively, from last year.

Any recent changes to analyst estimates for Microchip Technology should also be noted by investors. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.32% 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 14.51. This represents a discount compared to its industry's average Forward P/E of 20.29.

Investors should also note that MCHP has a PEG ratio of 0.86 right now. 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. Semiconductor - Analog and Mixed stocks are, on average, holding a PEG ratio of 1.87 based on yesterday's closing prices.

The Semiconductor - Analog and Mixed industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 48, which puts it in the top 20% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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 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