Stock Analysis on Net

Microchip Technology Inc. (NASDAQ:MCHP)

This company has been moved to the archive! The financial data has not been updated since February 2, 2023.

Economic Value Added (EVA)

Microsoft Excel

Economic Profit

Microchip Technology Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Net operating profit after taxes (NOPAT)1 1,620,172 488,868 455,414 695,844 428,761 180,568
Cost of capital2 15.86% 15.49% 13.92% 13.03% 15.50% 15.43%
Invested capital3 11,963,600 12,643,700 13,725,600 14,715,398 5,149,468 6,087,016
 
Economic profit4 (277,231) (1,470,133) (1,455,722) (1,222,162) (369,624) (758,769)

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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,620,17215.86% × 11,963,600 = -277,231

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Microchip Technology Inc. economic profit decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Net Operating Profit after Taxes (NOPAT)

Microchip Technology Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Net income 1,285,500 349,400 570,600 355,900 255,400 164,639
Deferred income tax expense (benefit)1 7,900 (138,900) (490,300) (62,200) 51,200 (126,888)
Increase (decrease) in allowance for expected credit losses2 1,000 300 2,900 (200) 100 (456)
Increase (decrease) in deferred revenue3 117,600
Increase (decrease) in liability for restructuring and other exit costs4 100 (8,400) (23,500) 600 (12,100) 40,167
Increase (decrease) in equity equivalents5 126,600 (147,000) (510,900) (61,800) 39,200 (87,177)
Interest expense 257,000 356,900 497,300 502,900 199,000 146,346
Interest expense, operating lease liability6 6,882 7,417 6,403 8,137 3,799 4,677
Adjusted interest expense 263,882 364,317 503,703 511,037 202,799 151,023
Tax benefit of interest expense7 (55,415) (76,507) (105,778) (107,318) (63,983) (52,858)
Adjusted interest expense, after taxes8 208,467 287,811 397,926 403,719 138,816 98,165
(Gain) loss on marketable securities 5,600 15,200 1,522
Interest income (500) (1,700) (2,800) (8,100) (22,000) (3,079)
Investment income, before taxes (500) (1,700) (2,800) (2,500) (6,800) (1,557)
Tax expense (benefit) of investment income9 105 357 588 525 2,145 545
Investment income, after taxes10 (395) (1,343) (2,212) (1,975) (4,655) (1,012)
(Income) loss from discontinued operations, net of tax11 5,953
Net operating profit after taxes (NOPAT) 1,620,172 488,868 455,414 695,844 428,761 180,568

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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for expected credit losses.

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in liability for restructuring and other exit costs.

5 Addition of increase (decrease) in equity equivalents to net income.

6 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 162,700 × 4.23% = 6,882

7 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 263,882 × 21.00% = 55,415

8 Addition of after taxes interest expense to net income.

9 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 500 × 21.00% = 105

10 Elimination of after taxes investment income.

11 Elimination of discontinued operations.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Microchip Technology Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Cash Operating Taxes

Microchip Technology Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Income tax provision (benefit) 197,000 (9,900) (420,200) (151,400) 481,900 (80,805)
Less: Deferred income tax expense (benefit) 7,900 (138,900) (490,300) (62,200) 51,200 (126,888)
Add: Tax savings from interest expense 55,415 76,507 105,778 107,318 63,983 52,858
Less: Tax imposed on investment income 105 357 588 525 2,145 545
Cash operating taxes 244,410 205,150 175,290 17,593 492,538 98,396

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).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Microchip Technology Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

Invested Capital

Microchip Technology Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Current portion of long-term debt 1,322,900 608,800 1,360,800 1,309,900 49,952
Long-term debt excluding current maturities 7,687,400 7,581,200 8,873,400 8,946,200 1,758,400 2,900,524
Operating lease liability1 162,700 165,200 139,200 142,998 61,468 74,830
Total reported debt & leases 7,850,100 9,069,300 9,621,400 10,449,998 3,129,768 3,025,306
Stockholders’ equity 5,894,800 5,337,100 5,585,500 5,287,500 3,279,800 3,270,711
Net deferred tax (assets) liabilities2 (1,757,300) (1,705,300) (1,430,000) (971,100) 105,600 340,175
Allowance for expected credit losses3 6,200 5,200 4,900 2,000 2,200 2,084
Deferred revenue4 117,600
Liability for restructuring and other exit costs5 16,000 15,900 24,300 47,800 28,100 40,225
Equity equivalents6 (1,617,500) (1,684,200) (1,400,800) (921,300) 135,900 382,484
Accumulated other comprehensive (income) loss, net of tax7 20,600 26,200 21,600 20,700 17,600 14,378
Adjusted stockholders’ equity 4,297,900 3,679,100 4,206,300 4,386,900 3,433,300 3,667,573
Projects in process8 (182,400) (102,700) (100,100) (119,200) (118,300) (104,318)
Available-for-sale investments and marketable equity securities9 (2,000) (2,000) (2,000) (2,300) (1,295,300) (501,545)
Invested capital 11,963,600 12,643,700 13,725,600 14,715,398 5,149,468 6,087,016

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).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of liability for restructuring and other exit costs.

6 Addition of equity equivalents to stockholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of projects in process.

9 Subtraction of available-for-sale investments and marketable equity securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Microchip Technology Inc. invested capital decreased from 2020 to 2021 and from 2021 to 2022.

Cost of Capital

Microchip Technology Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 36,968,602 36,968,602 ÷ 45,237,202 = 0.82 0.82 × 18.85% = 15.41%
Debt and Credit Facility3 8,105,900 8,105,900 ÷ 45,237,202 = 0.18 0.18 × 3.12% × (1 – 21.00%) = 0.44%
Operating lease liability4 162,700 162,700 ÷ 45,237,202 = 0.00 0.00 × 4.23% × (1 – 21.00%) = 0.01%
Total: 45,237,202 1.00 15.86%

Based on: 10-K (reporting date: 2022-03-31).

1 US$ in thousands

2 Equity. See details »

3 Debt and Credit Facility. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 38,961,814 38,961,814 ÷ 49,455,714 = 0.79 0.79 × 18.85% = 14.85%
Debt and Credit Facility3 10,328,700 10,328,700 ÷ 49,455,714 = 0.21 0.21 × 3.82% × (1 – 21.00%) = 0.63%
Operating lease liability4 165,200 165,200 ÷ 49,455,714 = 0.00 0.00 × 4.49% × (1 – 21.00%) = 0.01%
Total: 49,455,714 1.00 15.49%

Based on: 10-K (reporting date: 2021-03-31).

1 US$ in thousands

2 Equity. See details »

3 Debt and Credit Facility. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 21,545,100 21,545,100 ÷ 32,774,600 = 0.66 0.66 × 18.85% = 12.39%
Debt and Credit Facility3 11,090,300 11,090,300 ÷ 32,774,600 = 0.34 0.34 × 5.67% × (1 – 21.00%) = 1.52%
Operating lease liability4 139,200 139,200 ÷ 32,774,600 = 0.00 0.00 × 4.60% × (1 – 21.00%) = 0.02%
Total: 32,774,600 1.00 13.92%

Based on: 10-K (reporting date: 2020-03-31).

1 US$ in thousands

2 Equity. See details »

3 Debt and Credit Facility. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 19,352,942 19,352,942 ÷ 32,538,940 = 0.59 0.59 × 18.85% = 11.21%
Debt and Credit Facility3 13,043,000 13,043,000 ÷ 32,538,940 = 0.40 0.40 × 5.69% × (1 – 21.00%) = 1.80%
Operating lease liability4 142,998 142,998 ÷ 32,538,940 = 0.00 0.00 × 5.69% × (1 – 21.00%) = 0.02%
Total: 32,538,940 1.00 13.03%

Based on: 10-K (reporting date: 2019-03-31).

1 US$ in thousands

2 Equity. See details »

3 Debt and Credit Facility. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 21,811,406 21,811,406 ÷ 28,288,074 = 0.77 0.77 × 18.85% = 14.54%
Debt and Credit Facility3 6,415,200 6,415,200 ÷ 28,288,074 = 0.23 0.23 × 6.18% × (1 – 31.55%) = 0.96%
Operating lease liability4 61,468 61,468 ÷ 28,288,074 = 0.00 0.00 × 6.18% × (1 – 31.55%) = 0.01%
Total: 28,288,074 1.00 15.50%

Based on: 10-K (reporting date: 2018-03-31).

1 US$ in thousands

2 Equity. See details »

3 Debt and Credit Facility. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 18,929,913 18,929,913 ÷ 24,624,426 = 0.77 0.77 × 18.85% = 14.49%
Debt and Credit Facility3 5,619,684 5,619,684 ÷ 24,624,426 = 0.23 0.23 × 6.25% × (1 – 35.00%) = 0.93%
Operating lease liability4 74,830 74,830 ÷ 24,624,426 = 0.00 0.00 × 6.25% × (1 – 35.00%) = 0.01%
Total: 24,624,426 1.00 15.43%

Based on: 10-K (reporting date: 2017-03-31).

1 US$ in thousands

2 Equity. See details »

3 Debt and Credit Facility. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Microchip Technology Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit1 (277,231) (1,470,133) (1,455,722) (1,222,162) (369,624) (758,769)
Invested capital2 11,963,600 12,643,700 13,725,600 14,715,398 5,149,468 6,087,016
Performance Ratio
Economic spread ratio3 -2.32% -11.63% -10.61% -8.31% -7.18% -12.47%
Benchmarks
Economic Spread Ratio, Competitors4
Advanced Micro Devices Inc. -19.34% 37.39% 11.13% -6.99%
Analog Devices Inc. -8.37% -11.64% -6.69% -5.15% -7.93%
Applied Materials Inc. 28.57% 24.10% 12.28% 11.91% 19.99%
Broadcom Inc. 7.94% -1.44% -6.99% -6.68% -2.48%
Intel Corp. -6.92% 10.27% 15.94% 14.02%
KLA Corp. 27.24% 15.90% 4.75% 6.25% 24.41%
Lam Research Corp. 25.85% 25.31% 8.32% 4.87% 10.03%
Micron Technology Inc. 2.13% -2.40% -8.00% 2.18% 24.78%
NVIDIA Corp. 32.85% 13.28% -0.72% 59.88%
ON Semiconductor Corp. 1.88% -2.45% -13.74% -10.22%
Qualcomm Inc. 29.97% 27.38% 12.42% 13.82% -30.85%
Texas Instruments Inc. 36.30% 34.91% 30.06% 29.74%

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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -277,231 ÷ 11,963,600 = -2.32%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Microchip Technology Inc. economic spread ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Economic Profit Margin

Microchip Technology Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Mar 31, 2022 Mar 31, 2021 Mar 31, 2020 Mar 31, 2019 Mar 31, 2018 Mar 31, 2017
Selected Financial Data (US$ in thousands)
Economic profit1 (277,231) (1,470,133) (1,455,722) (1,222,162) (369,624) (758,769)
 
Net sales 6,820,900 5,438,400 5,274,200 5,349,500 3,980,800 3,407,807
Add: Increase (decrease) in deferred revenue 117,600
Adjusted net sales 6,938,500 5,438,400 5,274,200 5,349,500 3,980,800 3,407,807
Performance Ratio
Economic profit margin2 -4.00% -27.03% -27.60% -22.85% -9.29% -22.27%
Benchmarks
Economic Profit Margin, Competitors3
Advanced Micro Devices Inc. -47.95% 14.09% 4.98% -3.54%
Analog Devices Inc. -31.37% -74.79% -21.75% -15.79% -23.83%
Applied Materials Inc. 16.50% 15.38% 9.34% 8.26% 11.81%
Broadcom Inc. 14.85% -3.39% -19.28% -17.75% -5.30%
Intel Corp. -9.73% 11.50% 16.78% 15.71%
KLA Corp. 23.03% 15.67% 5.32% 8.73% 15.82%
Lam Research Corp. 18.75% 18.07% 8.15% 4.25% 8.72%
Micron Technology Inc. 3.65% -4.02% -15.79% 3.61% 28.87%
NVIDIA Corp. 22.02% 10.38% -0.93% 24.45%
ON Semiconductor Corp. 2.11% -2.75% -18.02% -12.71%
Qualcomm Inc. 19.96% 16.49% 9.37% 12.20% -25.52%
Texas Instruments Inc. 31.83% 31.23% 26.95% 24.93%

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).

1 Economic profit. See details »

2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -277,231 ÷ 6,938,500 = -4.00%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Microchip Technology Inc. economic profit margin improved from 2020 to 2021 and from 2021 to 2022.