where can i get doxycycline online antibioticsonlinerx

Microchip Technology Inc Valuation – February 2019 $MCHP

Company Profile (excerpt from Reuters): Microchip Technology Incorporated, incorporated on February 14, 1989, is engaged in developing, manufacturing and selling specialized semiconductor products used by its customers for a range of embedded control applications. The Company operates through two segments: semiconductor products and technology licensing. In the semiconductor products segment, the Company designs, develops, manufactures and markets microcontrollers, development tools and analog, interface, mixed signal and timing products. Its functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCHP – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,559,376,278 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 3.23% Fail
6. Moderate PEmg Ratio PEmg < 20 44.65 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.03 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 108.41 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.85
MG Growth Estimate 3.24%
MG Value $27.76
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $26.85
MG Value based on 0% Growth $15.74
Market Implied Growth Rate 18.08%
Current Price $82.70
% of Intrinsic Value 297.92%

Microchip Technology Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.52 in 2015 to an estimated $1.85 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.08% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Microchip Technology Inc. revealed the company was trading above its Graham Number of $32.58. The company pays a dividend of $1.45 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 44.65, which was above the industry average of 29.46. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-44.96.

Microchip Technology Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$44.96
Graham Number $32.58
PEmg 44.65
Current Ratio 1.04
PB Ratio 4.03
Current Dividend $1.45
Dividend Yield 1.75%
Number of Consecutive Years of Dividend Growth 17

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,176,200,000
Total Current Liabilities $2,088,100,000
Long-Term Debt $9,551,100,000
Total Assets $18,667,100,000
Intangible Assets $13,613,400,000
Total Liabilities $13,496,900,000
Shares Outstanding (Diluted Average) 251,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.38
Mar2018 $1.03
Mar2017 $0.71
Mar2016 $1.49
Mar2015 $1.65
Mar2014 $1.82
Mar2013 $0.62
Mar2012 $1.65
Mar2011 $2.15
Mar2010 $1.16
Mar2009 $1.31
Mar2008 $1.40
Mar2007 $1.62
Mar2006 $1.13
Mar2005 $1.01
Mar2004 $0.65
Mar2003 $0.42
Mar2002 $0.45
Mar2001 $0.70
Mar2000 $0.59
Mar1999 $0.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.85
Mar2018 $1.17
Mar2017 $1.25
Mar2016 $1.49
Mar2015 $1.52
Mar2014 $1.47
Mar2013 $1.32
Mar2012 $1.62
Mar2011 $1.58
Mar2010 $1.31
Mar2009 $1.35
Mar2008 $1.30
Mar2007 $1.16
Mar2006 $0.86
Mar2005 $0.70
Mar2004 $0.55
Mar2003 $0.49

Recommended Reading:

Other ModernGraham posts about the company

Microchip Technology Inc Valuation – April 2018 $MCHP
Microchip Technology Inc Valuation – July 2016 $MCHP
Microchip Technology Inc Valuation – January 2016 Update $MCHP
Microchip Technology Inc. Analysis – September 2015 Update $MCHP
Microchip Technology Stock Valuation – May 2015 Quarterly Update $MCHP

Other ModernGraham posts about related companies

KLA-Tencor Corp Valuation – January 2019 $KLAC
TE Connectivity Ltd Valuation – January 2019 $TEL
NVIDIA Corp Valuation – January 2019 $NVDA
Seagate Technology PLC Valuation – January 2019 $STX
Corning Inc Valuation – January 2019 $GLW
HP Inc Valuation – December 2018 $HPQ
Intel Corp Valuation – November 2018 $INTC
Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Microchip Technology Inc Valuation – April 2018 $MCHP

Company Profile (excerpt from Reuters): Microchip Technology Incorporated, incorporated on February 14, 1989, is engaged in developing, manufacturing and selling specialized semiconductor products used by its customers for a range of embedded control applications. The Company operates through two segments: semiconductor products and technology licensing. In the semiconductor products segment, the Company designs, develops, manufactures and markets microcontrollers, development tools and analog, interface, mixed signal and timing products. Its functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance.

MCHP Chart

MCHP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCHP – April 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,800,736,707 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.98 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -16.02% Fail
6. Moderate PEmg Ratio PEmg < 20 64.94 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.63 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.98 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.03 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.39
MG Growth Estimate -0.79%
MG Value $9.61
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $20.14
MG Value based on 0% Growth $11.80
Market Implied Growth Rate 28.22%
Current Price $90.18
% of Intrinsic Value 938.78%

Microchip Technology Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.47 in 2014 to an estimated $1.39 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 28.22% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Microchip Technology Inc. revealed the company was trading above its Graham Number of $23.23. The company pays a dividend of $1.44 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 64.94, which was above the industry average of 51.31. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.47.

Microchip Technology Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.47
Graham Number $23.23
PEmg 64.94
Current Ratio 2.98
PB Ratio 6.63
Current Dividend $1.44
Dividend Yield 1.60%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,253,441,000
Total Current Liabilities $756,832,000
Long-Term Debt $3,039,600,000
Total Assets $8,123,793,000
Intangible Assets $4,083,577,000
Total Liabilities $4,938,718,000
Shares Outstanding (Diluted Average) 234,106,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.68
Mar2017 $0.71
Mar2016 $1.49
Mar2015 $1.65
Mar2014 $1.82
Mar2013 $0.62
Mar2012 $1.65
Mar2011 $2.15
Mar2010 $1.16
Mar2009 $1.31
Mar2008 $1.40
Mar2007 $1.62
Mar2006 $1.13
Mar2005 $1.01
Mar2004 $0.65
Mar2003 $0.42
Mar2002 $0.45
Mar2001 $0.70
Mar2000 $0.59
Mar1999 $0.24
Mar1998 $0.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.39
Mar2017 $1.25
Mar2016 $1.49
Mar2015 $1.52
Mar2014 $1.47
Mar2013 $1.32
Mar2012 $1.62
Mar2011 $1.58
Mar2010 $1.31
Mar2009 $1.35
Mar2008 $1.30
Mar2007 $1.16
Mar2006 $0.86
Mar2005 $0.70
Mar2004 $0.55
Mar2003 $0.49
Mar2002 $0.51

Recommended Reading:

Other ModernGraham posts about the company

Microchip Technology Inc Valuation – January 2016 Update $MCHP
Microchip Technology Inc. Analysis – September 2015 Update $MCHP
Microchip Technology Stock Valuation – May 2015 Quarterly Update $MCHP
34 Companies in the Spotlight This Week – 2/7/15
Microchip Technology Inc. Quarterly Valuation – January 2015 $MCHP

Other ModernGraham posts about related companies

TE Connectivity Ltd Valuation – March 2018 $TEL
Juniper Networks Inc Valuation – March 2018 $JNPR
NVIDIA Corp Valuation – March 2018 $NVDA
Seagate Technology PLC Valuation – March 2018 $STX
HP Inc Valuation – February 2018 $HPQ
Intel Corp Valuation – February 2018 $INTC
Apple Inc Valuation – February 2018 $AAPL
Lam Research Corp Valuation – September 2017 $LRCX
Vicor Corp Valuation – Initial Coverage $VICR
Emerson Electric Co Valuation – August 2017 $EMR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Microchip Technology Inc Valuation – July 2016 $MCHP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Microchip Technology Inc (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporated is engaged in developing, manufacturing and selling specialized semiconductor products used by its customers for a range of embedded control applications. The Company operates through two segments: semiconductor products and technology licensing. In the semiconductor products segment, the Company designs, develops, manufactures and markets microcontrollers, development tools and analog, interface, mixed signal and timing products. Its functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance. Its product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a spectrum of linear, mixed-signal, power management, thermal management, radio frequency (RF), timing, safety, security, wired connectivity and wireless connectivity devices, as well as serial electrically erasable programmable read-only memories (EEPROMs) and serial flash memories.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCHP – July 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,967,951,675 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 8.11 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.01% Pass
6. Moderate PEmg Ratio PEmg < 20 28.91 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.77 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 8.11 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.91 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MCHP value chart July 2016

EPSmg $1.97
MG Growth Estimate 7.44%
MG Value $46.17
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $28.63
MG Value based on 0% Growth $16.78
Market Implied Growth Rate 10.20%
Current Price $57.08
% of Intrinsic Value 123.64%

Microchip Technology Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.32 in 2013 to an estimated $1.97 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.2% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Microchip Technology Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

MCHP charts July 2016

Net Current Asset Value (NCAV) -$1.47
Graham Number $26.18
PEmg 28.91
Current Ratio 8.11
PB Ratio 5.77
Current Dividend $1.43
Dividend Yield 2.51%
Number of Consecutive Years of Dividend Growth 15

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $3,096,713,000
Total Current Liabilities $382,009,000
Long-Term Debt $2,483,037,000
Total Assets $5,567,515,000
Intangible Assets $1,619,001,000
Total Liabilities $3,416,596,000
Shares Outstanding (Diluted Average) 217,388,000

Earnings Per Share History

Next Fiscal Year Estimate $2.89
Mar2016 $1.49
Mar2015 $1.65
Mar2014 $1.82
Mar2013 $0.62
Mar2012 $1.65
Mar2011 $2.15
Mar2010 $1.16
Mar2009 $1.33
Mar2008 $1.40
Mar2007 $1.62
Mar2006 $1.13
Mar2005 $1.01
Mar2004 $0.65
Mar2003 $0.42
Mar2002 $0.45
Mar2001 $0.69
Mar2000 $0.56
Mar1999 $0.28
Mar1998 $0.34
Mar1997 $0.28

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.97
Mar2016 $1.49
Mar2015 $1.52
Mar2014 $1.47
Mar2013 $1.32
Mar2012 $1.63
Mar2011 $1.59
Mar2010 $1.31
Mar2009 $1.36
Mar2008 $1.30
Mar2007 $1.16
Mar2006 $0.86
Mar2005 $0.70
Mar2004 $0.55
Mar2003 $0.49
Mar2002 $0.51
Mar2001 $0.50

Recommended Reading:

Other ModernGraham posts about the company

Microchip Technology Inc Valuation – January 2016 Update $MCHP
Microchip Technology Inc. Analysis – September 2015 Update $MCHP
Microchip Technology Stock Valuation – May 2015 Quarterly Update $MCHP
34 Companies in the Spotlight This Week – 2/7/15
Microchip Technology Inc. Quarterly Valuation – January 2015 $MCHP

Other ModernGraham posts about related companies

Jabil Circuit Inc Valuation – July 2016 $JBL
KLA-Tencor Corp Valuation – July 2016 $KLAC
Linear Technology Corp Valuation – July 2016 $LLTC
Arrow Electronics Inc Valuation – July 2016 $ARW
Lam Research Corp Valuation – June 2016 $LRCX
TE Connectivity Ltd Valuation – June 2016 $TEL
Juniper Networks Inc Valuation – June 2016 $JNPR
Nvidia Corporation Valuation – June 2016 $NVDA
Intel Corporation Valuation – May 2016 $INTC
HP Inc Valuation – May 2016 $HPQ

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Microchip Technology Inc Valuation – January 2016 Update $MCHP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Microchip Technology Inc (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporated develops, manufactures and sells specialized semiconductor products for a range of embedded control applications. The Company operates in segments, including semiconductor products and technology licensing. The Company’s product portfolio consists of general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers; linear, mixed-signal, power management; thermal management; Radio-frequency (RF), safety, security, wired connectivity and wireless connectivity devices, as well as serial EEPROMs, Serial Flash memories, Parallel Flash memories and serial Static Random Access Memory (SRAM). The Company also licenses Flash-IP solutions that are incorporated in a range of products. The Company’s products are applicable in the automotive, communications, computing, consumer and industrial control markets.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCHP

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,762,697,011 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.47 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 29.79% Fail
6. Moderate PEmg Ratio PEmg < 20 25.21 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.40 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 7.47 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.12 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

MCHP value chart January 2016

EPSmg $1.71
MG Growth Estimate 0.83%
MG Value $17.41
Opinion Overvalued
MG Value based on 3% Growth $24.84
MG Value based on 0% Growth $14.56
Market Implied Growth Rate 8.36%
Current Price $43.20
% of Intrinsic Value 248.09%

Microchip Technology Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings growth over the last ten years along with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.62 in 2012 to an estimated $1.71 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 8.36% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Microchip Technology Inc (MCHP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MCHP charts January 2016

Net Current Asset Value (NCAV) -$4.04
Graham Number $22.53
PEmg 25.21
Current Ratio 7.47
PB Ratio 4.40
Dividend Yield 3.31%
Number of Consecutive Years of Dividend Growth 14

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $2,778,887,000
Total Current Liabilities $371,776,000
Long-Term Debt $2,687,874,000
Total Assets $5,786,309,000
Intangible Assets $1,711,103,000
Total Liabilities $3,656,928,000
Shares Outstanding (Diluted Average) 217,099,000

Earnings Per Share History

Next Fiscal Year Estimate $2.15
Mar15 $1.65
Mar14 $1.82
Mar13 $0.62
Mar12 $1.65
Mar11 $2.15
Mar10 $1.16
Mar09 $1.31
Mar08 $1.40
Mar07 $1.62
Mar06 $1.13
Mar05 $1.01
Mar04 $0.65
Mar03 $0.42
Mar02 $0.45
Mar01 $0.70
Mar00 $0.59
Mar99 $0.24
Mar98 $0.31
Mar97 $0.28
Mar96 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.71
Mar15 $1.52
Mar14 $1.47
Mar13 $1.32
Mar12 $1.62
Mar11 $1.58
Mar10 $1.31
Mar09 $1.35
Mar08 $1.30
Mar07 $1.16
Mar06 $0.86
Mar05 $0.70
Mar04 $0.55
Mar03 $0.49
Mar02 $0.51
Mar01 $0.50
Mar00 $0.37

Recommended Reading:

Other ModernGraham posts about the company

Microchip Technology Inc. Analysis – September 2015 Update $MCHP
Microchip Technology Stock Valuation – May 2015 Quarterly Update $MCHP
34 Companies in the Spotlight This Week – 2/7/15
Microchip Technology Inc. Quarterly Valuation – January 2015 $MCHP
18 Companies in the Spotlight This Week – 10/25/14

Other ModernGraham posts about related companies

Avago Technologies Ltd Valuation – January 2016 Update $AVGO
KLA-Tencor Corp Valuation – January 2016 Update $KLAC
Lam Research Corp Valuation – January 2016 Update $LRCX
Amphenol Corporation Valuation – January 2016 Update $APH
Arrow Electronics Inc Valuation – December 2015 Update $ARW
TE Connectivity Ltd Valuation – December 2015 Update $TEL
Broadcom Corp Valuation – November 2015 Update $BRCM
SanDisk Corp Valuation – November 2015 Update $SNDK
Corning Inc Valuation – November 2015 Update $GLW
Intel Corp Valuation – November 2015 Update $INTC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Microchip Technology Inc. Analysis – September 2015 Update $MCHP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Microchip Technology Inc. (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporation develops, manufactures and sells specialized semiconductor products used by customers for embedded control applications. The Company’s product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety, security, wired connectivity and wireless connectivity devices, as well as serial EEPROMs, Serial Flash memories, Parallel Flash memories and serial SRAM memories. The Company licenses Flash-IP solutions that are incorporated in a range of products. The Company’s synergistic product portfolio targets applications in the automotive, communications, computing, consumer and industrial control markets. The Company’s products include microcontrollers, development tools, analog, interface and mixed signal products, memory products and technology licensing.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCHP – August 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.83
MG Growth Estimate 1.91%
MG Value $22.54
Opinion Overvalued
MG Value based on 3% Growth $26.54
MG Value based on 0% Growth $15.56
Market Implied Growth Rate 7.07%
Current Price $41.42
% of Intrinsic Value 183.73%

Microchip Technology Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.62 in 2012 to an estimated $1.83 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 7.07% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Microchip Technology Inc. (MCHP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MCHP Charts August 2015

Net Current Asset Value (NCAV) -$2.32
Graham Number $23.34
PEmg 22.64
Current Ratio 6.06
PB Ratio 4.28
Dividend Yield 3.45%
Number of Consecutive Years of Dividend Growth 14

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $2,255,614,000
Total Current Liabilities $372,308,000
Long-Term Debt $1,858,697,000
Total Assets $4,856,985,000
Intangible Assets $1,042,148,000
Total Liabilities $2,758,103,000
Shares Outstanding (Diluted Average) 216,767,000

Earnings Per Share History

Next Fiscal Year Estimate $2.50
Mar15 $1.65
Mar14 $1.82
Mar13 $0.62
Mar12 $1.65
Mar11 $2.15
Mar10 $1.16
Mar09 $1.31
Mar08 $1.40
Mar07 $1.62
Mar06 $1.13
Mar05 $1.01
Mar04 $0.65
Mar03 $0.42
Mar02 $0.45
Mar01 $0.70
Mar00 $0.59
Mar99 $0.24
Mar98 $0.31
Mar97 $0.28
Mar96 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.83
Mar15 $1.52
Mar14 $1.47
Mar13 $1.32
Mar12 $1.62
Mar11 $1.58
Mar10 $1.31
Mar09 $1.35
Mar08 $1.30
Mar07 $1.16
Mar06 $0.86
Mar05 $0.70
Mar04 $0.55
Mar03 $0.49
Mar02 $0.51
Mar01 $0.50
Mar00 $0.37

Recommended Reading:

Other ModernGraham posts about the company

Microchip Technology Stock Valuation – May 2015 Quarterly Update $MCHP
34 Companies in the Spotlight This Week – 2/7/15
Microchip Technology Inc. Quarterly Valuation – January 2015 $MCHP
18 Companies in the Spotlight This Week – 10/25/14
Microchip Technology Inc. Quarterly Stock Valuation – October 2014 $MCHP

Other ModernGraham posts about related companies

KLA-Tencor Corporation Analysis – September 2015 Update $KLAC
Avago Technologies Ltd Analysis – Initial Coverage $AVGO
Arrow Electronics Inc. Analysis – Initial Coverage $ARW
TE Connectivity Limited Analysis – August 2015 Update $TEL
Broadcom Corporation Analysis – August 2015 Update $BRCM
SanDisk Corporation Analysis – August 2015 Update $SNDK
Corning Inc. Analysis – August 2015 Update $GLW
Intel Corporation Analysis – August 2015 Update $INTC
Advanced Micro Devices Inc. Analysis – Initial Coverage $AMD
Nvidia Corporation Analysis – August 2015 Update $NVDA

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Microchip Technology Stock Valuation – May 2015 Quarterly Update $MCHP

MicrochipTechnology_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – May 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a Microchip Technology stock analysis showing a specific look at how Microchip Technology (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporation develops, manufactures and sells specialized semiconductor products used by customers for embedded control applications. The Company’s product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety, security, wired connectivity and wireless connectivity devices, as well as serial EEPROMs, Serial Flash memories, Parallel Flash memories and serial SRAM memories. The Company licenses Flash-IP solutions that are incorporated in a range of products. The Company’s synergistic product portfolio targets applications in the automotive, communications, computing, consumer and industrial control markets. The Company’s products include microcontrollers, development tools, analog, interface and mixed signal products, memory products and technology licensing.
MCHP Chart

MCHP data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $49.13
MG Value $11.21
MG Opinion Overvalued
Value Based on 3% Growth $22.08
Value Based on 0% Growth $12.94
Market Implied Growth Rate 11.88%
Net Current Asset Value (NCAV) -$0.32
PEmg 32.27
Current Ratio 7.53
PB Ratio 5.31

Balance Sheet – March 2015

Current Assets $2,665,000,000
Current Liabilities $354,000,000
Total Debt $1,827,000,000
Total Assets $4,781,000,000
Intangible Assets $1,076,000,000
Total Liabilities $2,736,000,000
Outstanding Shares 220,900,000

Earnings Per Share

2015 $1.65
2014 $1.82
2013 $0.62
2012 $1.65
2011 $2.15
2010 $1.16
2009 $1.31
2008 $1.40
2007 $1.62
2006 $1.13
2005 $1.01

Earnings Per Share – ModernGraham

2015 $1.52
2014 $1.47
2013 $1.32
2012 $1.62
2011 $1.58
2010 $1.31

Dividend History
MCHP Dividend Chart

MCHP Dividend data by YCharts

Conclusion:

As this Microchip Technology stock analysis shows, Microchip Technology is suitable for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is only concerned with the lack of earnings growth over the last five years.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $1.58 in 2011 to only $1.52 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 11.88% annual earnings growth over the next 7-10 years and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value well below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Microchip Technology (MCHP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Microchip Technology Inc. Quarterly Valuation – January 2015 $MCHP

MicrochipTechnology_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – January 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Microchip Technology Inc. (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporated develops and manufactures specialized semiconductor products used by its customers for a variety of embedded control applications. The Company’s portfolio consists of specialized 8-bit, 16-bit, and 32-bit PIC microcontrollers and 16-bit dsPIC digital signal controllers, which feature on-board Flash (reprogrammable) memory technology. In addition, the Company offers a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety and security, and interface devices, as well as serial EEPROMs, Serial Flash memories and Parallel Flash memories. The Company also licenses Flash-IP solutions that are incorporated in a broad range of products. In November 2013, Microchip Technology Inc announced the acquisition of EqcoLogic. In April 2014, Microchip Technology Inc acquired Supertex Inc.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $45.10
MG Value $24.58
MG Opinion Overvalued
Value Based on 3% Growth $26.67
Value Based on 0% Growth $15.63
Market Implied Growth Rate 8.01%
Net Current Asset Value (NCAV) -$2.64
PEmg 24.52
Current Ratio 5.05
PB Ratio 4.47

Balance Sheet – December 2014

Current Assets $1,783,000,000
Current Liabilities $353,000,000
Total Debt $1,342,000,000
Total Assets $4,629,000,000
Intangible Assets $0
Total Liabilities $2,373,000,000
Outstanding Shares 223,500,000

Earnings Per Share

2015 (estimate) $2.60
2014 $1.82
2013 $0.62
2012 $1.65
2011 $2.15
2010 $1.16
2009 $1.31
2008 $1.40
2007 $1.62
2006 $1.13
2005 $1.01

Earnings Per Share – ModernGraham

2015 (estimate) $1.84
2014 $1.47
2013 $1.32
2012 $1.62
2011 $1.58
2010 $1.31

Dividend History

Conclusion:

Microchip Technology Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings growth over the last ten years as well as the high PEmg and PB ratios.  The Enterprising Investor has no initial concerns as the company passes all of the investor type’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.58 in 2011 to only an estimated $1.84 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 8.01% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Microchip Technology Inc. (MCHP) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Microchip Technology Inc. (MCHP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Microchip Technology Inc. (MCHP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Microchip Technology Inc. Quarterly Stock Valuation – October 2014 $MCHP

MicrochipTechnology_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies to Research for the Defensive Investor – October 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Microchip Technology Inc. (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporated develops and manufactures specialized semiconductor products used by its customers for a variety of embedded control applications. The Company’s portfolio consists of specialized 8-bit, 16-bit, and 32-bit PIC microcontrollers and 16-bit dsPIC digital signal controllers, which feature on-board Flash (reprogrammable) memory technology. In addition, the Company offers a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety and security, and interface devices, as well as serial EEPROMs, Serial Flash memories and Parallel Flash memories. The Company also licenses Flash-IP solutions that are incorporated in a broad range of products. In November 2013, Microchip Technology Inc announced the acquisition of EqcoLogic. In April 2014, Microchip Technology Inc acquired Supertex Inc.
MCHP Chart

MCHP data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $38.39
MG Value $19.65
MG Opinion Overvalued
Value Based on 3% Growth $25.37
Value Based on 0% Growth $14.87
Market Implied Growth Rate 6.72%
Net Current Asset Value (NCAV) $0.53
PEmg 21.95
Current Ratio 6.81
PB Ratio 3.97

Balance Sheet – 6/30/2014

Current Assets $2,450,000,000
Current Liabilities $360,000,000
Total Debt $1,336,000,000
Total Assets $4,502,000,000
Intangible Assets $908,000,000
Total Liabilities $2,332,000,000
Outstanding Shares 224,500,000

Earnings Per Share

2015 (estimate) $2.32
2014 $1.82
2013 $0.62
2012 $1.65
2011 $2.20
2010 $1.16
2009 $1.33
2008 $1.40
2007 $1.62
2006 $1.13
2005 $1.01

Earnings Per Share – ModernGraham

2015 (estimate) $1.75
2014 $1.47
2013 $1.33
2012 $1.64
2011 $1.60
2010 $1.31

Dividend History
MCHP Dividend Chart

MCHP Dividend data by YCharts

Conclusion:

Microchip Technologies qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor has concerns with the company’s level of growth over the last ten years, and high PEmg and PB ratios.  The Enterprising Investor has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.60 in 2011 to only an estimated $1.75 for 2015.  This level of demonstrated growth does not support the market’s implied estimate of 6.72% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out previous ModernGraham valuations of Microchip Technologies (MCHP) for better perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Microchip Technologies (MCHP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Microchip Technologies (MCHP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Microchip Technology Inc. Quarterly Valuation – July 2014 $MCHP

MicrochipTechnology_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Microchip Technology (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporated develops and manufactures specialized semiconductor products used by its customers for a variety of embedded control applications. The Company’s portfolio consists of specialized 8-bit, 16-bit, and 32-bit PIC microcontrollers and 16-bit dsPIC digital signal controllers, which feature on-board Flash (reprogrammable) memory technology. In addition, the Company offers a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety and security, and interface devices, as well as serial EEPROMs, Serial Flash memories and Parallel Flash memories. The Company also licenses Flash-IP solutions that are incorporated in a broad range of products. In November 2013, Microchip Technology Inc announced the acquisition of EqcoLogic. In April 2014, Microchip Technology Inc acquired Supertex Inc.
MCHP Chart

MCHP data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $48.54
MG Value $17.90
MG Opinion Overvalued
Value Based on 3% Growth $21.35
Value Based on 0% Growth $12.52
Market Implied Growth Rate 12.23%
Net Current Asset Value (NCAV) $0.19
PEmg 32.96
Current Ratio 5.86
PB Ratio 4.55

Balance Sheet – 3/31/2014

Current Assets $1,969,400,000
Current Liabilities $336,100,000
Total Debt $1,003,300,000
Total Assets $4,067,600,000
Intangible Assets $721,600,000
Total Liabilities $1,932,200,000
Outstanding Shares 200,000,000

Earnings Per Share

2014 $1.82
2013 $0.62
2012 $1.65
2011 $2.20
2010 $1.16
2009 $1.33
2008 $1.40
2007 $1.62
2006 $1.13
2005 $1.01

Earnings Per Share – ModernGraham

2014 $1.47
2013 $1.33
2012 $1.64
2011 $1.60
2010 $1.31
2009 $1.36

Dividend History

MCHP Dividend Chart

MCHP Dividend data by YCharts

Conclusion:

Microchip Technology is suitable for the Enterprising Investor but not the Defensive Investor, who has concerns with the lack of earnings stability over the last ten years and the high PEmg and PB ratios.  The Enterprising Investor, on the other hand, has no major concerns as the company passes all of the investor type’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities through a review of ModernGraham’s valuation of Analog Devices Inc. (ADI).  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.31 in 2010 to only $1.47 in 2014.  This low level of demonstrated growth does not support the market’s implied estimate of 12.23% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out the previous ModernGraham valuations of Microchip Technology (MCHP)!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Microchip Technology (MCHP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Microchip Technology (MCHP) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia or the company website for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Microchip Technology Inc. (MCHP) Quarterly Valuation – April 2014

MicrochipTechnology_LogoBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing 5 Undervalued Companies for the Defensive Investor.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Microchip Technology Inc. (MCHP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Microchip Technology Incorporated develops and manufactures specialized semiconductor products used by its customers for a variety of embedded control applications. The Company’s portfolio consists of specialized 8-bit, 16-bit, and 32-bit PIC microcontrollers and 16-bit dsPIC digital signal controllers, which feature on-board Flash (reprogrammable) memory technology. In addition, the Company offers a broad spectrum of high-performance linear, mixed-signal, power management, thermal management, RF, safety and security, and interface devices, as well as serial EEPROMs, Serial Flash memories and Parallel Flash memories. The Company also licenses Flash-IP solutions that are incorporated in a broad range of products. In November 2013, Microchip Technology Inc announced the acquisition of EqcoLogic. In April 2014, Microchip Technology Inc acquired Supertex Inc.

MCHP Chart

MCHP data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $47.33
MG Value $23.90
MG Opinion Overvalued
Value Based on 3% Growth $23.14
Value Based on 0% Growth $13.57
Market Implied Growth Rate 10.58%
Net Current Asset Value (NCAV) $0.21
PEmg 29.66
Current Ratio 6.22
PB Ratio 4.54

Balance Sheet – 12/31/2013

Current Assets $1,969,000,000
Current Liabilities $316,400,000
Total Debt $1,005,300,000
Total Assets $4,003,100,000
Intangible Assets $742,200,000
Total Liabilities $1,928,000,000
Outstanding Shares 199,120,000

Earnings Per Share

2014 (estimate) $2.19
2013 $0.62
2012 $1.65
2011 $2.20
2010 $1.16
2009 $1.33
2008 $1.40
2007 $1.62
2006 $1.13
2005 $1.01
2004 $0.65

Earnings Per Share – ModernGraham

2014 (estimate) $1.60
2013 $1.33
2012 $1.64
2011 $1.60
2010 $1.31
2009 $1.36

Dividend History

MCHP Dividend Chart

MCHP Dividend data by YCharts

Conclusion:

Microchip Technology qualifies for the Enterprising Investor but not the Defensive Investor.  For the Defensive Investor, the company has shown insufficient earnings growth in the ten year historical period and trades at high PEmg and PB ratios.  However, the company passes all 5 of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research into a company and its competitors including a review of ModernGraham’s valuation of Analog Devices, Inc. (ADI) and ModernGraham’s valuation of Texas Instruments (TXN).  From a valuation perspective, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.31 in 2010 to only an estimated $1.60 for 2014.  This low level of demonstrated growth does not support the market’s implied estimate of 10.58% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that falls below the market price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Microchip Technology Inc. (MCHP)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Microchip Technology Inc. (MCHP) or any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Back To Top