Microchip Technology Second Quarter Earnings Sneak Peek

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S&P 500 (NYSE:SPY) component Microchip Technology (NASDAQ:MCHP) will unveil its latest earnings on Thursday, November 8, 2012. Microchip Technology develops and makes specialized semiconductor products used in a variety of embedded control applications.

Microchip Technology Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of 44 cents per share, a rise of 4.8% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from 47 cents. Between one and three months ago, the average estimate was unchanged. It has since dropped over the last month. For the year, analysts are projecting profit of $1.78 per share, a rise of 3.5% from last year.

Past Earnings Performance: Last quarter, the company missed estimates by one cent, coming in at net income of 43 cents per share versus a mean estimate of profit of 44 cents per share. In the fourth quarter of the last fiscal year, the company beat estimates by one cent.

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A Look Back: In the first quarter, profit fell 20.7% to $78.7 million (39 cents a share) from $99.3 million (49 cents a share) the year earlier, missing analyst expectations. Revenue fell 6% to $352.1 million from $374.5 million.

Wall St. Revenue Expectations: Analysts predict a rise of 19.7% in revenue from the year-earlier quarter to $407.7 million.

Stock Price Performance: Between August 9, 2012 and November 2, 2012, the stock price fell $2.72 (-7.8%), from $34.86 to $32.14. The stock price saw one of its best stretches over the last year between July 24, 2012 and August 1, 2012, when shares rose for seven straight days, increasing 6.7% (+$2.12) over that span. It saw one of its worst periods between April 27, 2012 and May 18, 2012 when shares fell for 16 straight days, dropping 13.9% (-$4.92) over that span.

Key Stats:

On the top line, the company is hoping to use this earnings announcement to snap a string of four-straight quarters of revenue decreases. Revenue fell 10.9% in the second quarter of the last fiscal year, 10.5% in third quarter of the last fiscal year and 10.8% in the fourth quarter of the last fiscal year and then fell again in the first quarter.

Heading into this earnings announcement, net income has dropped 25.7% on average for the last four quarters.

Analyst Ratings: With six analysts rating the stock a buy, none rating it a sell and five rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 8.92 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company improved this liquidity measure from 8.13 in the fourth quarter of the last fiscal year to the last quarter driven in part by an increase in current assets. Current assets increased 10.6% to $2.23 billion while liabilities rose by 0.9% to $250 million.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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