December 26, 2024
Top 10 Stock Microchip Technology Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Microchip Technology – Top 10 Stock in Low Emission Leaders
Microchip Technology is listed as a top 10 stock on December 26, 2024 in the market index Low Emissions because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 15 (15% performer), Obermatt issues an overall sell recommendation for Microchip Technology on December 26, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Semiconductors |
| Index | Artificial Intelligence, Low Emissions, Dividends USA, Electromobility, Human Rights, NASDAQ 100, NASDAQ, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Microchip Technology Sell
| 360 METRICS | December 26, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 71 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 12 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 17 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 27 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 15 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 15 (better than 15% compared with alternatives), overall professional sentiment and financial characteristics for the stock Microchip Technology are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Microchip Technology. Only the consolidated Value Rank has an attractive rank of 71, which means that the share price of Microchip Technology is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 71% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 12, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 17, meaning the company has a riskier financing structure than 83% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 73% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 27. ...read more
RECOMMENDATION: With a consolidated 360° View of 15, Microchip Technology is worse than 85% of all alternative stock investment opportunities based on the Obermatt Method. This means that Microchip Technology shares are on the riskier side for investors. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 71. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 12), a riskier financing structure than the competition (Safety Rank of 17), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 27) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. We recommend evaluating whether the future of Microchip Technology is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Microchip Technology. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Microchip Technology only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 27 (better than 27% compared with alternatives), overall professional sentiment and engagement for the stock Microchip Technology is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Microchip Technology. Analyst Opinions are at a rank of 57 (better than 57% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 16, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Microchip Technology. The Professional Investors rank is also low at 31, meaning that professional investors hold less stock in this company than in 69% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 44, which means that the current professional news and professional social networks are critical of this company (more negative news than for 56% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 27 (less encouraging than 73% compared with investment alternatives), Microchip Technology has a reputation among professional investors that is below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Microchip Technology Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 71 (better than 71% compared with alternatives), Microchip Technology shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Microchip Technology. Price-to-Profit (also referred to as price-earnings, P/E) is 50 which means that the stock price compared with what market professionals expect for future profits is lower than for 50% of comparable companies, indicating a good value concerning Microchip Technology's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 33, which means that the stock price is lower as regards to invested capital than for 33% of comparable investments. On the other hand, Price-to-Sales is less favorable than 74% of alternatives (only 26% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 0% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 71, is a buy recommendation based on Microchip Technology's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Microchip Technology Growth Momentum negative
| GROWTH METRICS | December 26, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 48 |
|
||||||
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 22 |
|
||||||
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 30 |
|
||||||
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 19 |
|
||||||
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 12 |
|
||||||
ANALYSIS: With an Obermatt Growth Rank of 12 (better than 12% compared with alternatives), Microchip Technology shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Microchip Technology. Sales Growth has a rank of 48, which means that currently professionals expect the company to grow less than 52% of its competitors. The same is valid for Profit Growth, with a rank of 22, and Capital Growth with 30. In addition, Stock Returns have a below market rank of 19, which means that the stock returns have recently been below 81% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 12, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Microchip Technology Debt Financing Safety risky
| SAFETY METRICS | December 26, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 18 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 5 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 69 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 17 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 17 (better than 17% compared with alternatives), the company Microchip Technology has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Microchip Technology is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Microchip Technology. Liquidity is at 69, meaning the company generates more profit to service its debt than 69% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 5, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 95% of its competitors. Leverage is also high at a rank of 18, which means that the company has an above-average debt-to-equity ratio. It has more debt than 82% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 17 (worse than 83% compared with alternatives), Microchip Technology has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Microchip Technology Lowest Financial Performance
| COMBINED PERFORMANCE | December 26, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 71 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 12 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 69 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 9 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 9 (worse than 91% compared with investment alternatives), Microchip Technology (Semiconductors, USA) shares have lower financial characteristics compared with similar stocks. Shares of Microchip Technology are a good value (attractively priced) with a consolidated Value Rank of 71 (better than 71% of alternatives) but show below-average growth (Growth Rank of 12), and are riskily financed (Safety Rank of 17), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 9, is a sell recommendation based on Microchip Technology's financial characteristics. As the company Microchip Technology's key financial metrics exhibit good value (Obermatt Value Rank of 71) but low growth (Obermatt Growth Rank of 12) and risky financing practices (Obermatt Safety Rank of 17), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 71% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.