Microchip Technology trending higher, but fundamentals are mixed
The semiconductor industry has been at the center of the trade discussions between China and the U.S. Intellectual property rights are a major sticking point between the two countries. On November 25, China hinted at stricter rules to protect intellectual property rights and chip companies jumped as a result.
One particular chip company I am watching is Microchip Technology (Nasdaq: MCHP). The stock has been trending higher, but there are some concerns when it comes to the company's fundamentals. Looking at the chart first, we see on the daily chart how the stock has moved significantly higher since late May. The stock did pull back in the first part of November, but it looks like it has reversed course at this point.
We see how the daily stochastic readings dropped in to oversold territory in the last few weeks, but the indicators have turned higher and made a bullish crossover on November 22. The indicators were in oversold territory and made bullish crossovers in May, early August, and late August, and each time the stock rallied. This particular setup looks more like the round pattern from May than the V-shaped patterns in August.
While the char looks good, there are some concerns regarding the fundamental performance of the company. Microchip has seen its earnings grow by 25% per year over the last three years while sales have grown by 25% as well. One problem comes from the third quarter earnings report which showed that earnings fell by 9% and sales dropped 7%. Analysts expect earnings to fall by 15% on the year with sales being down an estimated 4.9% for the year.
The company's management efficiency ratings are really strong with the return on equity at 36.8% and the profit margin is at 30.4%.
Looking at the Fundamental Analysis Overview from Tickeron, Microchip only has one area where it is ever so slightly above average. The Profit vs. Risk Rating is at 41 which indicates well-balanced risk and returns. The average Profit vs. Risk Rating for the industry is 67, placing this stock slightly better than average.
The Tickeron Price Growth Rating for Microchip is 50, and that is the midpoint for the ratings. A rating of 1 indicates the highest price growth while a rating of 100 indicates the lowest price growth. The rating measures how the stock price has grown over the past year compared to S&P 500 components.
The SMR rating from Tickeron is 56, indicating strong sales and a profitable business model, but it is slightly below average. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents.
The Tickeron Valuation Rating of 74 indicates that the company is slightly overvalued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization.
The PE Growth Rating for Microchip is 100, pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents. A rating of 1 indicates highest PE growth while a rating of 100 indicates lowest PE growth.
The sentiment indicators for Microchip are mixed with extreme bullish sentiment from analysts and extreme bearish sentiment from short sellers. There are 22 analysts covering the stock with 18 "buy" ratings and four "hold" ratings. This puts the buy percentage at 81.8% and that is well above average.
The short interest ratio is a whopping 14.0 and that is one of the biggest short interest ratios I have seen lately. The average short interest ratio is around 3.0. If the stock rallies, this high short interest could add fuel to the fire as the short sellers can add buying pressure as they scramble to cover their positions.
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Momentum Indicator for MCHP turns negative, indicating new downward trend
MCHP saw its Momentum Indicator move below the 0 level on August 21, 2026. This is an indication that the stock could be shifting in to a new downward move. Traders may want to consider selling the stock or exploring put options. Tickeron's A.I.dvisor looked at 96 similar instances where the indicator turned negative. In of the 96 cases, the stock moved further down in the following days. The odds of a decline are at .
Technical Analysis (Indicators)
Bearish Trend Analysis
Following a 3-day decline, the stock is projected to fall further. Considering past instances where MCHP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for MCHP entered a downward trend on August 07, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where MCHP's RSI Oscillator exited the oversold zone, of 21 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
The Moving Average Convergence Divergence (MACD) for MCHP just turned positive on August 05, 2026. Looking at past instances where MCHP's MACD turned positive, the stock continued to rise in of 46 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where MCHP advanced for three days, in of 298 cases, the price rose further within the following month. The odds of a continued upward trend are .
MCHP may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Fundamental Analysis (Ratings)
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. MCHP’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (6.246) is normal, around the industry mean (7.465). P/E Ratio (109.132) is within average values for comparable stocks, (155.851). Projected Growth (PEG Ratio) (0.221) is also within normal values, averaging (1.777). Dividend Yield (0.024) settles around the average of (0.015) among similar stocks. P/S Ratio (7.937) is also within normal values, averaging (53.922).
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. MCHP’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 75, placing this stock worse than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
a manufacturer of microcontrollers for high volume embedded control applications
Industry Semiconductors
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