- 2Q Adjusted EPS Forecast: Expected between 40 cents to 46 cents, which is below the estimate of 61 cents.
- 2Q Adjusted Gross Margin: Expected between 58.5% to 59.5%, missing the estimate of 60.9%.
- 2Q Net Sales: Projected between $1.12 billion to $1.18 billion, falling short of the estimate of $1.33 billion.
- 1Q Adjusted EPS: Reported at 53 cents, down from $1.64 year-over-year, but slightly above the estimate of 52 cents.
- 1Q Adjusted Gross Margin: Reported at 59.9%, down from 68.4% year-over-year, and below the estimate of 60.1%.
- 1Q R&D Expenses: Totaled $241.7 million, a 19% decrease year-over-year, compared to the estimate of $234.9 million.
- 1Q Net Sales: Reported at $1.24 billion, a 46% decline year-over-year, but on par with the estimate.
- Upcoming Capital Expenditures: Expected to be between $35 million and $40 million for the quarter ending September 30, 2024.
- Fiscal 2025 Capital Expenditures: Projected at around $175 million.
- CEO’s Statement: Ganesh Moorthy highlighted the company’s alignment with guidance despite macro challenges and customers reducing inventory due to shorter lead times.
- Growth Potential: Moorthy remains optimistic about sustainable growth owing to the company’s expanded portfolio.
- Market Environment: Industrial and automotive markets in Europe and the Americas are weaker than expected, extending the period of inventory correction.
- Financial Health: According to CFO Eric Bjornholt, the company has maintained financial health through proactive cost and balance sheet management.
- Analyst Recommendations: 17 buy ratings, 7 hold ratings, and no sell ratings.
Microchip Technology on Smartkarma
On Smartkarma, the independent investment research network, analysts are closely monitoring Microchip Technology. Baptista Research recently published a report titled “Microchip Technology: How Their Latest Innovations Are Set to Dominate the Market! – Major Drivers”. Despite reporting third-quarter 2024 financial results below expectations due to various challenges like slowing economic activity, the company showed resilience in non-GAAP gross and operating margins. Baptista Research is now evaluating factors that could impact the company’s future stock price and conducting an independent valuation using a Discounted Cash Flow (DCF) methodology.
Another analyst, Andrew Lu, shared insights in his report “From the Bellwether to a Lagging Indicator- Why Does Microchip Guide the Worst Among All?“. Lu pointed out that Microchip, with significant exposure to automotive, industrial, and digital consumer sectors, is facing challenges compared to its peers with higher exposure to PC and communication segments. Lu highlighted a possible over 20% year-over-year decline in 2024 sales and estimated earnings per share below market expectations. Despite the company’s struggles, Lu mentioned that the current stock price sits only 10% below historical peaks, suggesting potential risks for investors to consider.
A look at Microchip Technology Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 3 | |
| Growth | 5 | |
| Resilience | 2 | |
| Momentum | 3 | |
| OVERALL SMART SCORE | 3.0 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Microchip Technology Incorporated, a company specializing in designing and manufacturing microcontrollers, has shown a promising long-term outlook based on its Smartkarma Smart Scores. With a high score in Growth and Momentum, Microchip Technology is positioned for future expansion and market momentum. Its focus on developing innovative products for embedded control applications showcases a strong potential for growth in the tech industry.
Although the company’s Value and Resilience scores are moderate, its solid Dividend score indicates a stable dividend payout to investors. Overall, Microchip Technology‘s emphasis on growth and momentum, along with its commitment to innovation, paints a positive picture for its long-term performance in the market.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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