Should You Think About Buying Microchip Technology Incorporated (NASDAQ:MCHP) Now?

Microchip Technology Incorporated (NASDAQ:MCHP) received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$92.96 at one point, and dropping to the lows of US$80.58. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Microchip Technology's current trading price of US$82.18 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Microchip Technology’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Microchip Technology

Is Microchip Technology Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 1.5% below our intrinsic value, which means if you buy Microchip Technology today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $83.43, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Microchip Technology’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Microchip Technology?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Microchip Technology, it is expected to deliver a relatively unexciting earnings growth of 0.9%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What This Means For You

Are you a shareholder? It seems like the market has already priced in MCHP’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on MCHP, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Our analysis shows 2 warning signs for Microchip Technology (1 is a bit concerning!) and we strongly recommend you look at them before investing.

If you are no longer interested in Microchip Technology, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary 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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.