When Should You Buy Microchip Technology Incorporated (NASDAQ:MCHP)?

Today we're going to take a look at the well-established Microchip Technology Incorporated (NASDAQ:MCHP). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$93.12 at one point, and dropping to the lows of US$72.00. 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$76.29 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.

Check out our latest analysis for Microchip Technology

Is Microchip Technology Still Cheap?

Great news for investors – Microchip Technology is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is $114.86, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, 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 another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Microchip Technology generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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. Microchip Technology's earnings over the next few years are expected to increase by 35%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since MCHP is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MCHP for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MCHP. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

If you want to dive deeper into Microchip Technology, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Microchip Technology and you'll want to know about this.

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.