Price to Operating Profit (P/OP)
since 2005
Calculation
Microchip Technology Inc., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Operating income1 (in thousands) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| May 20, 2022 | 19.99 | = | 66.67 | ÷ | 3.34 | 3.34 | = | 1,849,600 | ÷ | 554,501,300 | |
| May 18, 2021 | 39.04 | = | 71.22 | ÷ | 1.82 | 1.82 | = | 998,100 | ÷ | 547,062,818 | |
| May 22, 2020 | 33.29 | = | 43.91 | ÷ | 1.32 | 1.32 | = | 647,100 | ÷ | 490,664,994 | |
| May 30, 2019 | 27.09 | = | 40.67 | ÷ | 1.50 | 1.50 | = | 714,300 | ÷ | 475,853,016 | |
| May 18, 2018 | 23.30 | = | 46.40 | ÷ | 1.99 | 1.99 | = | 936,300 | ÷ | 470,073,406 | |
| May 30, 2017 | 68.63 | = | 41.26 | ÷ | 0.60 | 0.60 | = | 275,817 | ÷ | 458,795,754 | |
| May 24, 2016 | 30.46 | = | 24.98 | ÷ | 0.82 | 0.82 | = | 352,345 | ÷ | 429,630,446 | |
| May 27, 2015 | 23.06 | = | 24.25 | ÷ | 1.05 | 1.05 | = | 425,620 | ÷ | 404,646,450 | |
| May 30, 2014 | 20.78 | = | 23.80 | ÷ | 1.15 | 1.15 | = | 458,864 | ÷ | 400,582,258 | |
| May 30, 2013 | 41.12 | = | 18.62 | ÷ | 0.45 | 0.45 | = | 178,553 | ÷ | 394,281,914 | |
| May 30, 2012 | 15.28 | = | 15.65 | ÷ | 1.02 | 1.02 | = | 396,516 | ÷ | 387,166,440 | |
| May 31, 2011 | 15.88 | = | 19.77 | ÷ | 1.24 | 1.24 | = | 474,183 | ÷ | 380,959,308 | |
| Jun 2, 2010 | 21.18 | = | 13.98 | ÷ | 0.66 | 0.66 | = | 244,959 | ÷ | 371,085,862 | |
| May 29, 2009 | 16.91 | = | 10.79 | ÷ | 0.64 | 0.64 | = | 233,328 | ÷ | 365,732,020 | |
| May 28, 2008 | 22.80 | = | 18.59 | ÷ | 0.82 | 0.82 | = | 301,665 | ÷ | 369,904,994 | |
| May 25, 2007 | 24.62 | = | 19.61 | ÷ | 0.80 | 0.80 | = | 347,811 | ÷ | 436,705,086 | |
| May 31, 2006 | 22.53 | = | 17.15 | ÷ | 0.76 | 0.76 | = | 326,364 | ÷ | 428,760,436 | |
| May 23, 2005 | 24.15 | = | 14.98 | ÷ | 0.62 | 0.62 | = | 258,647 | ÷ | 416,980,188 |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31), 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31), 10-K (reporting date: 2010-03-31), 10-K (reporting date: 2009-03-31), 10-K (reporting date: 2008-03-31), 10-K (reporting date: 2007-03-31), 10-K (reporting date: 2006-03-31), 10-K (reporting date: 2005-03-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of Microchip Technology Inc. Annual Report.
The analysis of valuation metrics from 2005 to 2022 reveals a fluctuating relationship between share price and operating profitability. While the share price exhibited a general upward trajectory over the seventeen-year period, the Price to Operating Profit (P/OP) ratio demonstrated significant volatility, reflecting periods of both valuation expansion and fundamental earnings contraction.
- Price to Operating Profit (P/OP) Trends
- The P/OP ratio remained relatively stable between 2005 and 2008, fluctuating within a narrow range of 22.53 to 24.62. A period of compression followed between 2009 and 2012, during which the ratio reached a historical low of 15.28. This indicates a phase where the market valuation was more conservative relative to operating earnings.
- Analysis of Valuation Anomalies
- Significant spikes in the P/OP ratio occurred in 2013 (41.12) and 2017 (68.63). These peaks were primarily driven by sharp decreases in operating profit per share rather than solely by share price appreciation. In 2013, operating profit per share declined to 0.45, and in 2017, it dropped to 0.60, which mathematically inflated the P/OP ratio during those periods.
- Correlation Between Price and Operating Performance
- Between 2018 and 2021, the P/OP ratio trended upward, reaching 39.04 in 2020, which coincided with the share price climbing to 71.22. By 2022, the ratio contracted sharply to 19.99. This reduction occurred despite a high share price of 66.67, as it was offset by a substantial increase in operating profit per share, which rose to a peak of 3.34, indicating a significant improvement in fundamental operational efficiency.
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Comparison to Competitors
Microchip Technology Inc., P/OP, long-term trends, comparison to competitors
| Microchip Technology Inc. | Advanced Micro Devices Inc. | Analog Devices Inc. | Applied Materials Inc. | Broadcom Inc. | Intel Corp. | Lam Research Corp. | Marvell Technology Inc. | Micron Technology Inc. | NVIDIA Corp. | Qualcomm Inc. | Texas Instruments Inc. | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| May 20, 2022 | 19.99 | 100.42 | 26.16 | 11.35 | 16.33 | 49.91 | 11.79 | — | 5.93 | 66.12 | 7.95 | 16.29 |
| May 18, 2021 | 39.04 | 39.48 | 56.12 | 18.85 | 30.78 | 10.82 | 18.34 | — | 12.48 | 75.08 | 15.84 | 17.67 |
| May 22, 2020 | 33.29 | 75.77 | 33.76 | 18.50 | 44.04 | 9.72 | 20.40 | — | 19.51 | 66.40 | 23.32 | 26.53 |
| May 30, 2019 | 27.09 | 91.66 | 24.74 | 16.36 | 36.85 | 13.29 | 12.13 | 295.81 | 6.83 | 24.79 | 12.60 | 21.46 |
| May 18, 2018 | 23.30 | 51.38 | 17.62 | 6.74 | 19.42 | 9.40 | 8.67 | 24.26 | 3.20 | 45.61 | 103.26 | 15.00 |
| May 30, 2017 | 68.63 | 59.52 | 30.97 | 14.35 | 44.92 | 11.86 | 13.68 | 78.88 | 7.98 | 31.31 | 30.15 | 16.81 |
| May 24, 2016 | 30.46 | — | 21.85 | 16.54 | — | 13.40 | 13.46 | — | 106.63 | 23.80 | 15.26 | 16.07 |
| May 27, 2015 | 23.06 | — | 22.69 | 12.92 | 23.80 | 9.66 | 14.45 | 18.85 | 6.04 | 16.52 | 15.68 | 12.34 |
| May 30, 2014 | 20.78 | — | 23.01 | 19.66 | 59.05 | 10.60 | 16.98 | 27.46 | 11.23 | 19.66 | 17.00 | 15.64 |
| May 30, 2013 | 41.12 | 26.08 | 20.62 | 46.30 | 23.31 | 10.02 | 64.12 | 18.01 | 74.52 | 12.16 | 16.30 | 17.02 |
| May 30, 2012 | 15.28 | — | 14.67 | 31.47 | 13.51 | 7.13 | 26.84 | 15.14 | — | 14.06 | 17.43 | 19.14 |
| May 31, 2011 | 15.88 | 14.16 | 9.26 | 6.04 | 12.05 | 7.62 | 5.54 | 11.35 | 7.18 | 40.70 | 17.45 | 12.75 |
| Jun 2, 2010 | 21.18 | 7.42 | 11.93 | 12.82 | 13.69 | 7.79 | 10.92 | 39.12 | 4.84 | — | 22.51 | 9.25 |
| May 29, 2009 | 16.91 | 8.03 | 30.48 | — | 81.90 | 20.19 | — | 35.44 | — | — | 32.90 | 15.16 |
| May 28, 2008 | 22.80 | — | 7.90 | 10.25 | — | 7.50 | 9.41 | — | — | 13.27 | 14.67 | 8.01 |
| May 25, 2007 | 24.62 | — | 16.49 | 10.36 | — | 14.36 | 6.12 | 10,050.76 | — | 22.39 | 22.57 | 11.81 |
| May 31, 2006 | 22.53 | — | 20.89 | 12.54 | — | 21.27 | 14.39 | 46.71 | 30.18 | 24.63 | 22.34 | 13.27 |
| May 23, 2005 | 24.15 | 84.32 | 26.80 | 21.07 | — | 9.99 | 10.23 | 59.44 | 39.55 | 37.70 | 27.83 | 17.12 |
Based on: 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31), 10-K (reporting date: 2017-03-31), 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31), 10-K (reporting date: 2010-03-31), 10-K (reporting date: 2009-03-31), 10-K (reporting date: 2008-03-31), 10-K (reporting date: 2007-03-31), 10-K (reporting date: 2006-03-31), 10-K (reporting date: 2005-03-31).