Microchip Technology Inc. (NASDAQ: MCHP) Stock price jumped around 3.3x from $ 18 in 2018 end, to about $ 60 currently, due largely to favorable changes in its P / S multiple. Additionally, the company witnessed a strong growth in revenue over this period, and revenue per share has increased, despite a substantial increase in the outstanding share count. This has enabled the stock to outperform the S&P, which has risen just about 50% in comparison over this period.
In our interactive dashboard, Why Microchip Technology Stock Moved: MCHP Stock Has Gained 230% Since 2018we break down the factors behind this move.
(A) Microchip’s total Revenue has grown 28% from $ 5.3 billion in FY 2019 to $ 6.8 billion
- Microchip’s total revenue has risen steadily from $ 5.3 billion in FY ’19 to $ 6.8 billion in FY ’22 (MCHP’s fiscal year ends in March), and currently stands at around the same level.
- As of FY ’22, Microchip’s largest segment is Semiconductor Products, contributing $ 6.7 billion to total sales, making up 98% of the company’s revenues, with Technology Licensing sales making up the remaining 2%.
- While total sales were roughly stagnant between FY ’19 and FY ’21, growth has taken off since, and FY ’22 sales stand nearly 1.3x higher than FY ’21 sales.
- For details about microchip operating income and comparison to peers, see Microchip Technology (MCHP) Operating Income Comparison
(B) Revenue per share (RPS) increased 8.4% from $ 11.35 in FY ’19 to $ 12.31 currently
- MCHP revenue rose from $ 5.3 billion in FY ’19 to $ 6.8 billion currently, while the outstanding share count increased from 471.4 million in FY ’19 to 554.3 million currently.
- Due to this, RPS has risen from $ 11.35 in FY ’19 to $ 12.31 currently.
(C) Price-To-Sales (P / S) multiple for Microchip rose from 1.9x in 2018-end to 8.9x by 2021 end, but has pulled back to 4.8x currently, still around 2.5x higher than its 2018 level.
- Due to MCHP’s stellar performance since 2018-end, its P / S multiple rose strongly from 1.9x in 2018-end to as high as 8.9x in 2021.
- However, due to the increasing economic uncertainty weighing on the broader markets and the slowing rate of sales growth, the P / S multiple has pulled back, currently standing at around 4.8x.
- For additional details about the company’s stock returns and comparisons to peers, see Microchip Technology (MCHP) Stock Return Comparison.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
|S&P 500 Return||2%||-22%||88%|
|Trefis Multi-Strategy Portfolio||-9%||-26%||189%|
 Month-to-date and year-to-date as of 6/21/2022
 Cumulative total returns since the end of 2016
Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.