What’s Behind Microchip Technology Stock’s Stellar Outperformance Since 2018?

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Microchip Technology Inc. (NASDAQ:MCHP) The stock price jumped nearly 3.3x from $18 at the end of 2018 to about $60 currently, primarily due to favorable changes in its P/S multiplier. Additionally, the company saw a strong increase in revenue over the period, and revenue per share grew despite a substantial increase in the outstanding share count. This has enabled the stock to outperform the S&P, which is up nearly 50% over the period.

In our interactive dashboard, Why Microchip Technology Stock Moved: MCHP stock is up 230% since 2018We break down the factors behind this move.

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Microchip’s total revenue grew 28% from $5.3 billion in fiscal 2019 to $6.8 billion currently

  • Microchip’s total revenue grew from $5.3 billion in FY19 to $6.8 billion in FY22 (MCHP’s fiscal year ends in March), and is currently at roughly the same level.
  • As of fiscal year ’22, Microchip’s largest segment is semiconductor products, contributing $6.7 billion in total sales, accounting for more than 98% of the company’s revenue, with technology licensing sales accounting for the remaining 2%.
  • While overall sales were almost stagnant between FY19 and FY21, growth has accelerated since then, and FY22 sales are up nearly 1.3x compared to FY21 sales.
  • For details about Microchip operating income and peer comparison, see Microchip Technology Operating Income Comparison

Revenue per share grew 8.4% from $11.35 in FY19 to $12.31 currently

  • MCHP’s revenue grew from $5.3 billion in FY19 to $6.8 billion at present, while the number of shares outstanding increased from 471.4 million in FY19 to 554.3 million currently.
  • Due to this, the RPS has increased from $11.35 in FY19 to $12.31 at present.

The price-to-sales (P/S) multiple for Microchip rose from 1.9x at the end of 2018 to 8.9x by the end of 2021, but is currently back to 4.8x, which is still roughly below 2018 levels. 2.5 times higher.

  • Due to MCHP’s impressive performance since the end of 2018, its P/S multiple increased from 1.9x at the end of 2018 to 8.9x in 2021.
  • However, due to rising economic uncertainty on the broader markets and a slowing rate of sales growth, the P/S multiple has pulled back, which is currently at around 4.8x.
  • For additional information about the company’s stock returns and peer comparison, see Microchip Technology Stock Return Comparison,

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