Microchip Technology

Methodology

Microchip's earnings can be cyclical with semiconductor demand though its focus on diversified embedded control markets provides more stability than memory or PC chips. Industrial and automotive exposure creates visibility, while inventory cycles can cause volatility. The calculation works best when normalizing for demand cycles and evaluating sustainable profitability through economic fluctuations.

Methodology

Microchip typically trades at moderate PEG ratios reflecting steady growth from microcontroller design wins across diverse end markets rather than explosive smartphone or PC exposure. The acquisition-driven growth strategy and consistent execution support stable valuations. Compare to analog and embedded semiconductor peers while considering the diversified revenue base and limited cyclicality.

Methodology

Microchip offers a meaningful dividend with management committed to consistent quarterly payments supported by stable cash generation. The dividend adds significant value to total returns for this disciplined semiconductor company. PEGY better reflects management's shareholder-friendly capital allocation combining growth, income, and buybacks.