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Zacks Equity Research
MCHP 
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For most investors, how much a stock’s price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you’d invested in Microchip Technology (MCHP – Free Report) ten years ago? It may not have been easy to hold on to MCHP for all that time, but if you did, how much would your investment be worth today?
Microchip Technology’s Business In-Depth
With that in mind, let’s take a look at Microchip Technology’s main business drivers.
Microchip Technology Inc. develops and manufactures microcontrollers, memory and analog and interface products for embedded control systems, which are small, low-power computers designed to perform specific tasks.
Chandler, AZ-based, Microchip reported total revenues of $6.821 billion in fiscal 2022.
Beginning from calendar year 2021, the company reports FPGA revenues combined with its licensing, memory and other or LMO segment revenues under a new revenue category referred to as “other.” The company has now three major product lines:
Microcontrollers (54.4% of fiscal 2022 revenues): This product portfolio comprises 8-bit, 16-bit and 32-bit PIC microcontrollers and 16-bit dsPIC digital signal controllers. Microchip’s expanding product portfolio driven by new microcontrollers’ roll outs aids it in expanding customer base and sustain its leading position in the market.
Analog (28%): These products consist of several families with approximately 800 power management, linear, mixed-signal, thermal management, RF Linear drivers, safety and security, and interface products. The line of mixed-signal products primarily includes data converters that convert data from analog to digital or vice versa.
Other (17.6%): The product line now comprises revenues from FPGA and LMO segments. LMO segment constitutes a combination of license fees and royalties related to SuperFlash technology, and fees for engineering services. Microchip licenses its SuperFlash technology to foundries, integrated device manufacturers and design partners across the world.
FPGA product line was primarily acquired as part of Microsemi acquisition.
In fiscal 2022, Americas, Europe and Asia contributed 25.5%, 19.2% and 55.3%, respectively to net sales.
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Microchip Technology ten years ago, you’re probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in November 2012 would be worth $5,196.89, or a gain of 419.69%, as of November 16, 2022, and this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 194.96% and the price of gold went up -0.23% over the same time frame.
Analysts are forecasting more upside for MCHP too.
Microchip is riding on consistent strength in its analog and microcontroller businesses. The company’s dominance in 8,16 and 32-bit microcontrollers is driving top-line growth. Strategic acquisitions like Microsemi and Atmel have expanded the product portfolio. It is gaining from recovery in demand across industrial, automotive and consumer end-markets, on reopening of economies, globally. Collaboration with the likes of AWS is positive. Shares have outperformed the industry year to date. Nevertheless, supply-chain constraints related to semiconductors has been a headwind. The company could not meet demand with adequate supply as shipping of products were facing increasing backlogs. Microchip expects wafer fab, as well as assembly and test constraints, will persist through 2023 and beyond. Leveraged balance sheet is a concern for investors.
Microchip Technology Incorporated (MCHP) – free report >>
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