Microchip Technology (MCHP) closed the most recent trading day at $97.65, moving -1.56% from the previous trading session. This change was narrower than the S&P 500’s 2.37% loss on the day. Elsewhere, the Dow lost 1.92%, while the tech-heavy Nasdaq lost 3.02%.
Prior to today’s trading, shares of the chipmaker had lost 8.99% over the past month. This has lagged the Computer and Technology sector’s loss of 2.69% and the S&P 500’s loss of 2.31% in that time.
Investors will be hoping for strength from MCHP as it approaches its next earnings release. The company is expected to report EPS of $1.42, down 0.7% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.26 billion, down 5.93% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.91 per share and revenue of $5.17 billion. These totals would mark changes of +5.16% and -1.97%, respectively, from last year.
Any recent changes to analyst estimates for MCHP should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
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 remained stagnant. MCHP is currently sporting a Zacks Rank of #3 (Hold).
Looking at its valuation, MCHP is holding a Forward P/E ratio of 16.78. Its industry sports an average Forward P/E of 31.99, so we one might conclude that MCHP is trading at a discount comparatively.
It is also worth noting that MCHP currently has a PEG ratio of 1.21. 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. The Semiconductor – Analog and Mixed industry currently had an average PEG ratio of 2.23 as of yesterday’s close.
The Semiconductor – Analog and Mixed industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 117, putting it in the top 47% 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.
You can find more information on all of these metrics, and much more, on Zacks.com.
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