NASDAQ:MCHP
$28.20
(3/12 2:32PM)
+2.5%
| Open | $27.5 |
Mkt Cap | $5.1 Billion |
| High | $28.25 |
52Wk High | $29.56 |
| Low | $27.4 |
52Wk Low | $19.66 |
| Volume | 3.3 Million |
Avg Vol 10D | 2.2 Million |
Ockham's Rating/Recommendation Summary
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MCHP Revenue
Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, MCHP the high and low end of the Price to Sales per share ratios are 8.56x and 5.12x respectively.
Notice that MCHP's current Price to Sales per share ratio is 5.95x, which is below its historical average only slightly. So, while not a huge positive for our analysis, we do feel it is worth noting that MCHP does look a bit undervalued on a Price to Sales basis, all other factors being equal. However, if the Price to Sales ratio drops further, Ockham Research is likely to become more bullish on this stock.
MCHP Cash Earnings
Looking at MCHP specifically in their Cash Earnings capabilities, Ockham views MCHP as above its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from MCHP. For example, MCHP's Cash Earnings ratio per share has fluctuated between 14.56 and 24.34 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where MCHP is with respect to prior business periods.
So when we look at MCHP, what does this slightly higher than historical level of Price to Cash Earnings mean? From the Ockham perspective, it basically represents that the market has a higher stock price attributed to this level of Cash Earnings than compared to normal. So while we view this as a negative from a valuation perspective, it certainly doesn't mean that MCHP couldn't rapidly improve in its value from other factors or a decline in stock price. The current Price to Cash Earnings level of 19.61 is 0% above the historical norm as calculated at Ockham. So a decline in stock price, or more hopefully, an increase in MCHP's Cash Earnings levels would improve our outlook for the stock.
MCHP Dividends
A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely.
When reviewing dividend yields for MCHP, we compare the historic high and low levels over the past, which is similar to our evaluation of Sales and Cash Earnings per share. Paying a dividend is not necessary for any company, but changes in dividend often can lend clues as to the health of the business. A rising dividend is a strong sign for an established company, as it reflects management's confidence in the company. MCHP’s estimated annual dividend is $1.36 resulting in a current dividend yield of 4.99%. The highest dividend yield from MCHP over recent history was 8.32% while the lowest dividend yield was 0.00%. MCHP’s current dividend yield is therefore significantly higher than its median dividend yield historically. In fact, the current yield is 19.95% above the median which weighs very positively on our analysis of MCHP.
Notice a Discussion Covering MCHP Appeared Recently in the Financial News
The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Microchip Technology Incorporated.
Microchip Technology Incorporated receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. We noticed recently that in comparison to all other stocks we analyze in the news; MCHP has received less coverage from the financial media in business television and blogs. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey.
“… MICROCHIP TECHNOLOGY (MCHP) this morning said it signed an amended deal to acquire Silicon Storage Technology (SSTI) for $3. 05 a share, up from $3 under a previous agreement. …”
Tech Trader Daily-Barron's: Discussion of Analysts and Microchip Technology Incorporated
Analysts' opinions can often carry a lot of weight, especially when they make major news and are covered on Tech Trader Daily-Barron's.
The Motley Fool CAPS data suggests that investors believe Microchip Technology Incorporated will beat the market in the foreseeable future. When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Microchip Technology Incorporated has been talked about more than normal recently. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on MCHP.
“… cents a share in 2011 profits, a level he says is required to justify the company’s decision last fall to turn down a $5-a-share bid from Microchip (MCHP). …”
Microchip Technology Incorporated (MCHP) Discussed on CNBC's Power Lunch
Microchip Technology Incorporated is in the news. Find out how this impacts MCHP trading on Ockham Research.
Takeover activity, one key thing to look at is cash. Cash is a percentage of your annual revenue and a data guy here put together a couple I want to go through these. If you look at other companies super cash rich, they're especially focused in tech where MICROCHIP TECHNOLOGY, 170% of their annual revenue cash in hand. Ciena, verisign. And celgene, cisco, google all have almost 100% of cash on do you buy or sell those stocks? >> dennis, you're making a very good point. Really since the subprime bubble burst and the credit crisis began, cash has been king, and even though credit is coming back, you're going to see the companies with a lot of cash on hand be able to do deals. Buying and selling. I think you have to look at individual situations, of course, but clearly if you have a lot of cash on your balance sheet, you're likely to be in the dealmaking game. >> carmine, do those stats actually maybe an argument for small cap technology stocks? You want to be the one that's being acquired, not the one that's necessarily doing the acquiring although those could benefit longer term. I would look beyond the technology area to look to some of the staples sectors. That's a sector that's lagged the market overall. I think valuations are very you should see more activity because of stable earning >> good to see you both. Thank you for your time today. >>> and the ipo market may be
“… MICROCHIP TECHNOLOGY, 170% of their annual revenue cash in hand. Ciena, verisign. And celgene, cisco, google all have almost 100% of cash on do you buy or sell those stocks? >> dennis, you're making a very good point. Really since the subprime bubble burst and the credit crisis began, cash has been king, and even though credit is coming back, you're going to see the companies with a lot of cash on hand be able to do deals. Buying and selling. I think you have to look at individual situations, of course, but clearly if you have a lot of cash on your balance sheet, you're likely to be in the dealmaking game. >> carmine, do those stats actually maybe an argument for small cap technology stocks? You want to be the one that's being acquired, not the one that's necessarily doing the acquiring although those could benefit longer term. I would look beyond the technology area to look to some of the staples sectors. That's a sector that's lagged the market overall. I think valuations are very you should see more activity because of stable earning >> good to see you both. Thank you for your time today. >>> and the ipo market may be …”
Microchip Technology Incorporated (MCHP) Discussed on CNBC's Power Lunch
Microchip Technology Incorporated is in the news. Find out how this impacts MCHP trading on Ockham Research.
Harder and technology enables that to occur. Those are three underlying reasons why tech has done pretty well this year. The s&p 500 is up about 15% year to date. >> MICROCHIP TECHNOLOGY, MCHP, the chip sector, it sounds like it's the commodity sector of technology as opposed to emerging or I have got that >> I think that's a fair comment comment. With microchip, we like their global exposure. You're uk talking about three-quarters of revenue being derived from outside sources, outside the u.S. That will be good as the dollar falls and the economy recovers. This is a well-run company with high margins and third, the dividend is 5%. We think there are a lot of
“… technology as opposed to emerging or I have got that >> I think that's a fair comment comment. With microchip, we like their global exposure. You're uk talking about three-quarters of revenue being derived from outside sources, outside the u.S. That will be good as the dollar falls and the economy recovers. This is a well-run company with high margins and third, the dividend is 5%. We think there are a lot of …”
Microchip Technology Incorporated (MCHP) Discussed on CNBC's Power Lunch
Microchip Technology Incorporated is in the news. Find out how this impacts MCHP trading on Ockham Research.
Reluctant. They seem to want to sell their holding up well here today. You can see the nasdaq still up on earlier highs. It's positive. MICROCHIP TECHNOLOGY at 5% sand dip also 5% higher. Some positive comments on the entire chips base coming out of ubs this morning. Amle is 5% higher. The market seemtdz to love the
“… his morning. Amle is 5% higher. The market seemtdz to love the …”
Microchip Technology Incorporated (MCHP) Discussed on CNBC's Squawk On The Street
Microchip Technology Incorporated is in the news. Find out how this impacts MCHP trading on Ockham Research.
>> quite a little thing, isn't it, bob? We turned around sharply since the last time we spoke. Roughly over 1% here today in line with the other benchmark let's look at some of the stocks that are working. MICROCHIP TECHNOLOGY. The company out with a fourth quarter forecast. That's better than expect pd the market readjusting to that news. Not take two but take that. The company coming out with a
“… th quarter forecast. That's better than expect pd the market readjusting to that news. Not take two but take that. The company coming out with a …”