What’s behind Microchip Technology Stock’s outstanding outperformance since 2018?

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Microchip Technology Inc. (NASDAQ: MCHP) The stock price jumped about 3.3 times from $18 at the end of 2018 to almost $60 currently, mainly due to the favorable development of its P/S multiple. Additionally, the company experienced a sharp increase in revenue during this period, and earnings per share increased, despite a substantial increase in the number of shares outstanding. This allowed the stock to strongly outperform the S&P, which rose only around 50% in comparison over this period.

In our interactive dashboard, Why Microchip Technology shares moved: MCHP stock has gained 230% since 2018we break down the factors driving this movement.

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

  • Microchip’s total revenue increased sharply from $5.3 billion in fiscal year 2019 to $6.8 billion in fiscal year 22 (MCHP’s fiscal year ends in March), and is currently at about the same level.
  • As of FY22, Microchip’s largest segment is semiconductor products, contributing $6.7 billion in total sales, accounting for more than 98% of company revenue, technological licenses representing the remaining 2%.
  • While total sales were roughly flat between FY2019 and FY21, growth has since taken off, and FY22 sales are almost 1.3x higher than FY20 sales. 21.
  • For more details on Microchip’s operating income and comparison with its peers, see Microchip Technology Operating Revenue Comparison

Earnings per share increased 8.4% from $11.35 in fiscal 2019 to $12.31 currently

  • MCHP’s revenue fell from $5.3 billion in fiscal 2019 to $6.8 billion currently, while the number of shares outstanding fell from 471.4 million during the year. financial year 2019 at 554.3 million currently.
  • Because of this, the RPS has gone from $11.35 in fiscal year 2019 to $12.31 currently.

The price-to-sales (P/S) multiple for Microchip went from 1.9x at the end of 2018 to 8.9x at the end of 2021, but fell back to 4.8x currently, still around 2.5x higher than its 2018 level

  • Due to the outstanding performance of MCHP since the end of 2018, its P/S multiple has increased sharply from 1.9x at the end of 2018 to 8.9x in 2021.
  • However, due to heightened economic uncertainty weighing on broader markets and a slowing rate of sales growth, the P/S multiple has declined, currently standing at around 4.8x.
  • For more details on the company’s stock returns and comparison with its peers, see Microchip Technology Stock Performance Comparison.

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