Intrinsic value of Microchip Technology - MCHP

Previous Close

$91.30

  Intrinsic Value

$88.04

stock screener

  Rating & Target

hold

-4%

Previous close

$91.30

 
Intrinsic value

$88.04

 
Up/down potential

-4%

 
Rating

hold

We calculate the intrinsic value of MCHP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 21.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  56.83
  21.70
  20.03
  18.53
  17.17
  15.96
  14.86
  13.88
  12.99
  12.19
  11.47
  10.82
  10.24
  9.72
  9.24
  8.82
  8.44
  8.09
  7.79
  7.51
  7.26
  7.03
  6.83
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
Revenue, $m
  3,408
  4,148
  4,978
  5,901
  6,914
  8,017
  9,209
  10,486
  11,848
  13,293
  14,817
  16,421
  18,102
  19,861
  21,698
  23,611
  25,604
  27,676
  29,831
  32,070
  34,397
  36,815
  39,329
  41,942
  44,660
  47,488
  50,432
  53,497
  56,692
  60,022
  63,495
Variable operating expenses, $m
 
  3,426
  4,066
  4,777
  5,557
  6,408
  7,326
  8,310
  9,360
  10,472
  11,647
  12,653
  13,949
  15,304
  16,719
  18,194
  19,729
  21,326
  22,986
  24,711
  26,504
  28,368
  30,305
  32,318
  34,412
  36,591
  38,860
  41,222
  43,683
  46,249
  48,926
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,176
  3,426
  4,066
  4,777
  5,557
  6,408
  7,326
  8,310
  9,360
  10,472
  11,647
  12,653
  13,949
  15,304
  16,719
  18,194
  19,729
  21,326
  22,986
  24,711
  26,504
  28,368
  30,305
  32,318
  34,412
  36,591
  38,860
  41,222
  43,683
  46,249
  48,926
Operating income, $m
  232
  722
  912
  1,124
  1,357
  1,610
  1,883
  2,176
  2,489
  2,820
  3,170
  3,768
  4,154
  4,557
  4,979
  5,418
  5,875
  6,351
  6,845
  7,359
  7,893
  8,448
  9,024
  9,624
  10,248
  10,897
  11,572
  12,275
  13,008
  13,773
  14,570
EBITDA, $m
  701
  1,268
  1,521
  1,803
  2,113
  2,450
  2,814
  3,205
  3,621
  4,062
  4,528
  5,018
  5,532
  6,070
  6,631
  7,216
  7,825
  8,458
  9,117
  9,801
  10,512
  11,251
  12,019
  12,818
  13,649
  14,513
  15,413
  16,350
  17,326
  18,343
  19,405
Interest expense (income), $m
  83
  102
  135
  172
  213
  259
  308
  362
  419
  480
  545
  613
  685
  760
  839
  921
  1,007
  1,097
  1,189
  1,286
  1,386
  1,491
  1,599
  1,712
  1,829
  1,951
  2,078
  2,210
  2,347
  2,490
  2,640
Earnings before tax, $m
  90
  620
  778
  952
  1,143
  1,351
  1,575
  1,815
  2,070
  2,340
  2,625
  3,155
  3,469
  3,797
  4,140
  4,496
  4,868
  5,254
  5,656
  6,073
  6,506
  6,957
  7,425
  7,912
  8,419
  8,946
  9,494
  10,066
  10,661
  11,282
  11,930
Tax expense, $m
  -81
  167
  210
  257
  309
  365
  425
  490
  559
  632
  709
  852
  937
  1,025
  1,118
  1,214
  1,314
  1,419
  1,527
  1,640
  1,757
  1,878
  2,005
  2,136
  2,273
  2,415
  2,563
  2,718
  2,879
  3,046
  3,221
Net income, $m
  165
  453
  568
  695
  835
  986
  1,150
  1,325
  1,511
  1,708
  1,917
  2,303
  2,532
  2,772
  3,022
  3,282
  3,553
  3,835
  4,129
  4,433
  4,750
  5,079
  5,420
  5,776
  6,146
  6,530
  6,931
  7,348
  7,783
  8,236
  8,709

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,303
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  7,687
  7,767
  9,323
  11,050
  12,948
  15,014
  17,245
  19,638
  22,188
  24,892
  27,748
  30,751
  33,900
  37,194
  40,632
  44,216
  47,947
  51,828
  55,863
  60,057
  64,414
  68,943
  73,650
  78,543
  83,633
  88,929
  94,441
  100,182
  106,164
  112,401
  118,905
Adjusted assets (=assets-cash), $m
  6,384
  7,767
  9,323
  11,050
  12,948
  15,014
  17,245
  19,638
  22,188
  24,892
  27,748
  30,751
  33,900
  37,194
  40,632
  44,216
  47,947
  51,828
  55,863
  60,057
  64,414
  68,943
  73,650
  78,543
  83,633
  88,929
  94,441
  100,182
  106,164
  112,401
  118,905
Revenue / Adjusted assets
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
  0.534
Average production assets, $m
  2,023
  2,464
  2,957
  3,505
  4,107
  4,762
  5,470
  6,229
  7,038
  7,896
  8,801
  9,754
  10,753
  11,798
  12,888
  14,025
  15,209
  16,440
  17,720
  19,050
  20,432
  21,868
  23,361
  24,914
  26,528
  28,208
  29,956
  31,777
  33,675
  35,653
  37,716
Working capital, $m
  1,601
  423
  508
  602
  705
  818
  939
  1,070
  1,209
  1,356
  1,511
  1,675
  1,846
  2,026
  2,213
  2,408
  2,612
  2,823
  3,043
  3,271
  3,509
  3,755
  4,012
  4,278
  4,555
  4,844
  5,144
  5,457
  5,783
  6,122
  6,477
Total debt, $m
  2,950
  3,847
  4,911
  6,092
  7,390
  8,803
  10,329
  11,966
  13,711
  15,560
  17,513
  19,567
  21,721
  23,974
  26,326
  28,778
  31,330
  33,985
  36,744
  39,613
  42,593
  45,691
  48,910
  52,258
  55,739
  59,361
  63,132
  67,059
  71,151
  75,416
  79,865
Total liabilities, $m
  4,416
  5,313
  6,377
  7,558
  8,856
  10,269
  11,795
  13,432
  15,177
  17,026
  18,979
  21,033
  23,187
  25,440
  27,792
  30,244
  32,796
  35,451
  38,210
  41,079
  44,059
  47,157
  50,376
  53,724
  57,205
  60,827
  64,598
  68,525
  72,617
  76,882
  81,331
Total equity, $m
  3,271
  2,454
  2,946
  3,492
  4,091
  4,744
  5,449
  6,205
  7,011
  7,866
  8,768
  9,717
  10,712
  11,753
  12,840
  13,972
  15,151
  16,378
  17,653
  18,978
  20,355
  21,786
  23,273
  24,820
  26,428
  28,101
  29,843
  31,658
  33,548
  35,519
  37,574
Total liabilities and equity, $m
  7,687
  7,767
  9,323
  11,050
  12,947
  15,013
  17,244
  19,637
  22,188
  24,892
  27,747
  30,750
  33,899
  37,193
  40,632
  44,216
  47,947
  51,829
  55,863
  60,057
  64,414
  68,943
  73,649
  78,544
  83,633
  88,928
  94,441
  100,183
  106,165
  112,401
  118,905
Debt-to-equity ratio
  0.902
  1.570
  1.670
  1.740
  1.810
  1.860
  1.900
  1.930
  1.960
  1.980
  2.000
  2.010
  2.030
  2.040
  2.050
  2.060
  2.070
  2.080
  2.080
  2.090
  2.090
  2.100
  2.100
  2.110
  2.110
  2.110
  2.120
  2.120
  2.120
  2.120
  2.130
Adjusted equity ratio
  0.308
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316
  0.316

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  165
  453
  568
  695
  835
  986
  1,150
  1,325
  1,511
  1,708
  1,917
  2,303
  2,532
  2,772
  3,022
  3,282
  3,553
  3,835
  4,129
  4,433
  4,750
  5,079
  5,420
  5,776
  6,146
  6,530
  6,931
  7,348
  7,783
  8,236
  8,709
Depreciation, amort., depletion, $m
  469
  546
  609
  679
  756
  840
  931
  1,028
  1,132
  1,242
  1,358
  1,251
  1,379
  1,513
  1,652
  1,798
  1,950
  2,108
  2,272
  2,442
  2,619
  2,804
  2,995
  3,194
  3,401
  3,616
  3,841
  4,074
  4,317
  4,571
  4,835
Funds from operations, $m
  1,354
  999
  1,177
  1,374
  1,591
  1,827
  2,081
  2,353
  2,643
  2,951
  3,275
  3,554
  3,911
  4,284
  4,674
  5,080
  5,503
  5,943
  6,400
  6,875
  7,369
  7,882
  8,415
  8,970
  9,547
  10,147
  10,771
  11,422
  12,100
  12,807
  13,544
Change in working capital, $m
  295
  75
  85
  94
  103
  113
  122
  130
  139
  147
  156
  164
  172
  179
  187
  195
  203
  211
  220
  228
  237
  247
  256
  267
  277
  288
  300
  313
  326
  340
  354
Cash from operations, $m
  1,059
  923
  1,092
  1,280
  1,488
  1,714
  1,959
  2,223
  2,504
  2,803
  3,119
  3,390
  3,739
  4,105
  4,487
  4,885
  5,300
  5,732
  6,180
  6,647
  7,132
  7,635
  8,159
  8,703
  9,269
  9,858
  10,471
  11,109
  11,774
  12,467
  13,190
Maintenance CAPEX, $m
  0
  -259
  -316
  -379
  -449
  -527
  -611
  -701
  -799
  -902
  -1,012
  -1,128
  -1,251
  -1,379
  -1,513
  -1,652
  -1,798
  -1,950
  -2,108
  -2,272
  -2,442
  -2,619
  -2,804
  -2,995
  -3,194
  -3,401
  -3,616
  -3,841
  -4,074
  -4,317
  -4,571
New CAPEX, $m
  -75
  -441
  -493
  -548
  -602
  -655
  -708
  -759
  -809
  -858
  -906
  -953
  -999
  -1,045
  -1,091
  -1,137
  -1,183
  -1,231
  -1,280
  -1,330
  -1,382
  -1,436
  -1,493
  -1,552
  -1,614
  -1,680
  -1,749
  -1,821
  -1,897
  -1,978
  -2,063
Cash from investing activities, $m
  -2,838
  -700
  -809
  -927
  -1,051
  -1,182
  -1,319
  -1,460
  -1,608
  -1,760
  -1,918
  -2,081
  -2,250
  -2,424
  -2,604
  -2,789
  -2,981
  -3,181
  -3,388
  -3,602
  -3,824
  -4,055
  -4,297
  -4,547
  -4,808
  -5,081
  -5,365
  -5,662
  -5,971
  -6,295
  -6,634
Free cash flow, $m
  -1,779
  223
  283
  353
  436
  532
  641
  763
  897
  1,043
  1,201
  1,309
  1,490
  1,682
  1,884
  2,096
  2,318
  2,551
  2,793
  3,045
  3,307
  3,580
  3,862
  4,156
  4,461
  4,777
  5,106
  5,448
  5,803
  6,172
  6,556
Issuance/(repayment) of debt, $m
  964
  947
  1,064
  1,181
  1,298
  1,413
  1,526
  1,637
  1,744
  1,850
  1,953
  2,054
  2,154
  2,253
  2,352
  2,451
  2,552
  2,655
  2,760
  2,868
  2,981
  3,098
  3,220
  3,347
  3,481
  3,622
  3,771
  3,927
  4,092
  4,265
  4,449
Issuance/(repurchase) of shares, $m
  42
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  910
  947
  1,064
  1,181
  1,298
  1,413
  1,526
  1,637
  1,744
  1,850
  1,953
  2,054
  2,154
  2,253
  2,352
  2,451
  2,552
  2,655
  2,760
  2,868
  2,981
  3,098
  3,220
  3,347
  3,481
  3,622
  3,771
  3,927
  4,092
  4,265
  4,449
Total cash flow (excl. dividends), $m
  -869
  1,170
  1,347
  1,535
  1,734
  1,945
  2,167
  2,399
  2,641
  2,893
  3,154
  3,363
  3,644
  3,935
  4,236
  4,548
  4,871
  5,205
  5,553
  5,913
  6,288
  6,677
  7,082
  7,503
  7,942
  8,400
  8,877
  9,375
  9,894
  10,437
  11,005
Retained Cash Flow (-), $m
  -1,120
  -436
  -492
  -546
  -600
  -653
  -705
  -756
  -806
  -855
  -902
  -949
  -995
  -1,041
  -1,087
  -1,133
  -1,179
  -1,226
  -1,275
  -1,325
  -1,377
  -1,431
  -1,487
  -1,546
  -1,608
  -1,673
  -1,742
  -1,814
  -1,890
  -1,971
  -2,055
Prev. year cash balance distribution, $m
 
  1,253
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,986
  855
  989
  1,135
  1,293
  1,462
  1,643
  1,835
  2,038
  2,252
  2,414
  2,649
  2,894
  3,149
  3,415
  3,692
  3,979
  4,278
  4,588
  4,911
  5,246
  5,595
  5,957
  6,334
  6,726
  7,135
  7,561
  8,004
  8,467
  8,950
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  1,894
  774
  845
  910
  968
  1,016
  1,053
  1,077
  1,087
  1,082
  1,037
  1,008
  967
  914
  852
  782
  707
  630
  552
  476
  403
  335
  274
  219
  172
  132
  99
  73
  52
  36
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Microchip Technology Incorporated is engaged in developing, manufacturing and selling specialized semiconductor products used by its customers for a range of embedded control applications. The Company operates through two segments: semiconductor products and technology licensing. In the semiconductor products segment, the Company designs, develops, manufactures and markets microcontrollers, development tools and analog, interface, mixed signal and timing products. Its functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance. Its product portfolio comprises general purpose and specialized 8-bit, 16-bit, and 32-bit microcontrollers, a spectrum of linear, mixed-signal, power management, thermal management, radio frequency (RF), timing, safety, security, wired connectivity and wireless connectivity devices, as well as serial electrically erasable programmable read-only memories (EEPROMs) and serial flash memories.

FINANCIAL RATIOS  of  Microchip Technology (MCHP)

Valuation Ratios
P/E Ratio 126.8
Price to Sales 6.1
Price to Book 6.4
Price to Tangible Book
Price to Cash Flow 19.8
Price to Free Cash Flow 21.3
Growth Rates
Sales Growth Rate 56.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -23.5%
Cap. Spend. - 3 Yr. Gr. Rate -7.9%
Financial Strength
Quick Ratio 26
Current Ratio 0.1
LT Debt to Equity 88.7%
Total Debt to Equity 90.2%
Interest Coverage 2
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.1%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 13.1%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 51.6%
Gross Margin - 3 Yr. Avg. 54.8%
EBITDA Margin 18.8%
EBITDA Margin - 3 Yr. Avg. 26.1%
Operating Margin 6.8%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 2.6%
Pre-Tax Margin - 3 Yr. Avg. 10.6%
Net Profit Margin 4.8%
Net Profit Margin - 3 Yr. Avg. 12.3%
Effective Tax Rate -90%
Eff/ Tax Rate - 3 Yr. Avg. -36.9%
Payout Ratio 190.9%

MCHP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MCHP stock intrinsic value calculation we used $3408 million for the last fiscal year's total revenue generated by Microchip Technology. The default revenue input number comes from 2017 income statement of Microchip Technology. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our MCHP stock valuation model: a) initial revenue growth rate of 21.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.9%, whose default value for MCHP is calculated based on our internal credit rating of Microchip Technology, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Microchip Technology.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of MCHP stock the variable cost ratio is equal to 83.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for MCHP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Microchip Technology.

Corporate tax rate of 27% is the nominal tax rate for Microchip Technology. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the MCHP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for MCHP are equal to 59.4%.

Life of production assets of 7.8 years is the average useful life of capital assets used in Microchip Technology operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for MCHP is equal to 10.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3271 million for Microchip Technology - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 232.719 million for Microchip Technology is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Microchip Technology at the current share price and the inputted number of shares is $21.2 billion.

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COMPANY NEWS

▶ Microchip, ON Semi, Skyworks Nab Price-Target Hikes Post-Earnings   [Nov-07-17 05:06PM  Investor's Business Daily]
▶ Microchip reaches $1 billion in sales for first time in latest quarter   [Nov-06-17 11:50PM  American City Business Journals]
▶ Microchip Tech beats Street 2Q forecasts   [04:36PM  Associated Press]
▶ Microchip Technology Downgraded, Universal Display Gets Price-Target Hike   [Nov-01-17 04:54PM  Investor's Business Daily]
▶ Top Analog Chip Stocks Get Price-Target Hikes On Strong Fundamentals   [Oct-19-17 04:37PM  Investor's Business Daily]
▶ Top Stock Picks for the Week of October 2nd   [Oct-02-17 01:50PM  Zacks]
▶ New Strong Buy Stocks for September 28th   [Sep-28-17 09:12AM  Zacks]
▶ Micron's Earnings Bode Well For Semiconductor Sector   [Sep-27-17 02:37PM  Barrons.com]
▶ Invasion of the Drones: Top 6 Stocks   [04:57AM  Investopedia]
▶ Time To Get Selective In The Semiconductor Industry   [Sep-18-17 10:32AM  Barrons.com]
▶ Understanding the IoT Trend for MCHP and CY   [Sep-12-17 02:40PM  Market Realist]
▶ 3 "Internet of Things" Stocks To Buy Now   [Sep-06-17 02:56PM  Zacks]
▶ Microchip hosting engineering job fair, hiring 85 for Chandler headquarters   [Sep-05-17 05:05PM  American City Business Journals]
▶ Nasdaq Leads As These 2 Mega-Cap Techs Clear Key Levels   [01:39PM  Investor's Business Daily]
▶ Nasdaq Notches Third Straight Session of Gains   [Aug-30-17 04:50PM  The Wall Street Journal]
▶ 3 Stocks with Impressive Growth Rates   [Aug-22-17 05:23PM  Zacks]
▶ Microchip Technology to Webcast Annual Stockholders Meeting   [Aug-17-17 06:45PM  GlobeNewswire]
▶ 3 "Internet of Things" Stocks to Buy Now   [Aug-07-17 03:15PM  Zacks]
▶ Microchip Tech beats Street 1Q forecasts   [02:05AM  Associated Press]
▶ Microchip reports record sales, earnings and quarterly dividend   [Aug-03-17 06:30PM  American City Business Journals]
▶ Get Your Grubhub On And Your Game Face Too: Investing Action Plan   [Aug-02-17 04:28PM  Investor's Business Daily]
Financial statements of MCHP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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