Microchip Technology (MCHP) has a Zacks #2 Rank. Its stock trades at 27.3x fiscal 2010 consensus EPS estimates and 18.8x fiscal 2011 consensus EPS estimates.
Income and Growth
The stock offers investors a dividend yield of 4.6%. That’s right a technology stock that not only pays a dividend, but it pays out an attractive dividend.
What’s more, analysts estimate that Microchip will grow its earnings per share at 10.7% per year for the next three to five years.
Company Description
Microchip Technology Inc. develops and manufactures semiconductor products for various embedded control applications. Its products include microcontrollers, digital signal controllers, development tools, and memory products.
Updated Outlook
On March 15, Microchip recently increased its guidance for its March 2010 quarter. Management expects sales to be up 8% sequentially, compared to its previous guidance of 3% to 7%. Growth will be driven by increased demand from customers in Asia and Europe. The company also expects to report record bookings in the quarter with flat-to-down inventory levels.
Microchip increased its GAAP earnings per share guidance to $0.37 from $0.34-$0.36. On a non-GAAP basis, Microchip guided to EPS of $0.42, up from $0.39-$0.41.
WIth management boosting its outlook, there is a good chance that Microchip can extend its better-than-expected earnings reports to four straight quarters. In the last three quarters, MCHP has beaten the Zacks Consensus by an average of 10.0%.
Estimates Holding Steady
The company updated its guidance more than a month ago, and it isn’t scheduled to report fiscal fourth-quarter results until May 6. So, analysts haven’t been given any new information to adjust their estimates.
As a result, EPS estimates have been pretty flat. In the last month, the Zacks Consensus Estimates for fiscal 2010 and 2011 haven’t moved. However, after the company upped its Q4 guidance, the 2010 Zacks Consensus moved higher by a penny, while the 2011 Zacks Consensus increased 8 cents.
The Chart
Unlike many other tech stocks, MCHP shares pulled back about 10% in the market’s February sell-off. Its shares have rebounded nicely, and the stock is up about 18% off those February lows.
