Microchip Technology Incorporated (MCHP) Company Bio
Microchip Technology develops, manufactures, and sells semiconductor products for various embedded control applications. The company was founded in 1989 and is based in Chandler, Arizona.
MCHP Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for MCHP, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Microchip Technology Inc ranked in the 48th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 7.33%. The most interesting components of our discounted cash flow analysis for Microchip Technology Inc ended up being:
The company's balance sheet shows it gets 75% of its capital from equity, and 25% of its capital from debt. Its equity weight surpasses that of only 22.36% of free cash flow generating stocks in the Technology sector.
Microchip Technology Inc's effective tax rate, as measured by taxes paid relative to net income, is at 0 -- greater than just 0% of US stocks with positive free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of Microchip Technology Inc? See MSI, OSTK, INTC, JCS, and AUDC.
Quality comes at a price, but I still believe that overpaying does limit some of your upside. Like many (if not most) other quality chip stocks, I thought Analog Devices (ADI) shares had come too far too fast, and my opinion of the valuation back in May (around the time...
Stephen Simpson, CFA on Seeking Alpha | August 24, 2020
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