Price to FCFE (P/FCFE)
Free Cash Flow to Equity (FCFE)
Microchip Technology Inc., FCFE calculation
US$ in thousands
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).
The financial data reveals a significant divergence between the growth of operating cash flows and the stability of free cash flow to equity (FCFE) over the six-year period ending March 31, 2022.
- Operating Cash Flow Performance
- Net cash provided by operating activities demonstrates a consistent and robust upward trajectory. From March 31, 2017, to March 31, 2022, operating cash flows grew from 1,050,104 thousand US$ to 2,842,700 thousand US$, representing a substantial increase in the company's ability to generate cash from its core business operations. A minor contraction occurred in 2020, but this was followed by accelerated growth in 2021 and 2022.
- FCFE Volatility and Anomalies
- Free cash flow to equity exhibits extreme volatility, contrasting sharply with the steady growth of operating activities. A notable anomaly occurred on March 31, 2019, where FCFE surged to 6,555,700 thousand US$, a value significantly higher than the operating cash flow for that period. This suggests an influx of cash from financing activities, such as significant new debt issuance. This peak was followed by a sharp decline in 2020 and 2021, with FCFE dropping to 406,300 thousand US$ and 409,300 thousand US$, respectively.
- Analysis of Cash Flow Divergence
- The disconnect between the rising operating cash flows and the fluctuating FCFE indicates that equity cash flows were heavily influenced by non-operating factors. While operating cash flows nearly tripled over the analyzed period, FCFE ended the period at 1,096,600 thousand US$, which is lower than the 2017 level of 1,938,806 thousand US$. The compression of FCFE relative to operating cash flow in 2020 and 2021 suggests a period of intensified capital expenditures or aggressive debt repayment.
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Price to FCFE Ratio, Current
Microchip Technology Inc., current P/FCFE calculation, comparison to benchmarks
| No. shares of common stock outstanding | 547,795,897 |
| Selected Financial Data (US$) | |
| Free cash flow to equity (FCFE) (in thousands) | 1,096,600) |
| FCFE per share | 2.00 |
| Current share price (P) | 84.53 |
| Valuation Ratio | |
| P/FCFE | 42.23 |
| Benchmarks | |
| P/FCFE, Competitors1 | |
| Advanced Micro Devices Inc. | 147.62 |
| Analog Devices Inc. | 37.94 |
| Applied Materials Inc. | 71.55 |
| Broadcom Inc. | 70.34 |
| Intel Corp. | — |
| KLA Corp. | 71.79 |
| Lam Research Corp. | 105.14 |
| Marvell Technology Inc. | 130.67 |
| Micron Technology Inc. | 820.81 |
| NVIDIA Corp. | 58.32 |
| Qualcomm Inc. | 15.04 |
| Texas Instruments Inc. | 87.91 |
| P/FCFE, Sector | |
| Semiconductors & Semiconductor Equipment | 186.89 |
| P/FCFE, Industry | |
| Information Technology | 82.69 |
Based on: 10-K (reporting date: 2022-03-31).
1 Click competitor name to see calculations.
If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.
Price to FCFE Ratio, Historical
Microchip Technology Inc., historical P/FCFE calculation, comparison to benchmarks
| Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | Mar 31, 2017 | ||
|---|---|---|---|---|---|---|---|
| No. shares of common stock outstanding1 | 554,501,300 | 547,062,818 | 490,664,994 | 475,853,016 | 470,073,406 | 458,795,754 | |
| Selected Financial Data (US$) | |||||||
| Free cash flow to equity (FCFE) (in thousands)2 | 1,096,600) | 409,300) | 406,300) | 6,555,700) | 1,138,600) | 1,938,806) | |
| FCFE per share3 | 1.98 | 0.75 | 0.83 | 13.78 | 2.42 | 4.23 | |
| Share price1, 4 | 66.67 | 71.22 | 43.91 | 40.67 | 46.40 | 41.26 | |
| Valuation Ratio | |||||||
| P/FCFE5 | 33.71 | 95.19 | 53.03 | 2.95 | 19.16 | 9.76 | |
| Benchmarks | |||||||
| P/FCFE, Competitors6 | |||||||
| Advanced Micro Devices Inc. | 33.46 | 44.72 | — | — | — | — | |
| Analog Devices Inc. | 24.14 | 34.67 | 33.98 | — | — | — | |
| Applied Materials Inc. | 19.17 | 27.20 | 23.21 | — | — | — | |
| Broadcom Inc. | 14.62 | 22.35 | 9.16 | — | — | — | |
| Intel Corp. | — | 14.25 | — | — | — | — | |
| KLA Corp. | 9.01 | 28.06 | — | — | — | — | |
| Lam Research Corp. | 24.95 | 34.58 | — | — | — | — | |
| Marvell Technology Inc. | 13.90 | 72.25 | — | — | — | — | |
| Micron Technology Inc. | 18.66 | 37.24 | 81.71 | — | — | — | |
| NVIDIA Corp. | 54.83 | 35.22 | — | — | — | — | |
| Qualcomm Inc. | 19.13 | 17.93 | 34.91 | — | — | — | |
| Texas Instruments Inc. | 23.88 | 21.87 | — | — | — | — | |
| P/FCFE, Sector | |||||||
| Semiconductors & Semiconductor Equipment | 28.10 | 25.18 | — | — | — | — | |
| P/FCFE, Industry | |||||||
| Information Technology | 26.68 | 27.39 | — | — | — | — | |
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 Data adjusted for splits and stock dividends.
3 2022 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 1,096,600,000 ÷ 554,501,300 = 1.98
4 Closing price as at the filing date of Microchip Technology Inc. Annual Report.
5 2022 Calculation
P/FCFE = Share price ÷ FCFE per share
= 66.67 ÷ 1.98 = 33.71
6 Click competitor name to see calculations.
The Price to Free Cash Flow to Equity (P/FCFE) ratio exhibits extreme volatility over the analyzed six-year period, indicating a significant decoupling between market valuation and the actual cash flow available to equity holders. The fluctuations in the ratio are primarily driven by erratic swings in FCFE per share rather than steady changes in the share price, leading to valuation multiples that vary from highly undervalued to exceptionally high.
- Share Price Trends
- The share price remained relatively stable between 2017 and 2020, fluctuating within a narrow range from 40.67 to 46.40. A substantial valuation increase occurred in 2021, with the price peaking at 71.22 before experiencing a moderate correction to 66.67 in 2022.
- Free Cash Flow to Equity (FCFE) Performance
- FCFE per share demonstrated high instability. A significant peak was recorded in 2019 at 13.78, representing the highest cash flow generation in the series. This was followed by a sharp decline in 2020 and 2021, where values dropped to 0.83 and 0.75, respectively, before a partial recovery to 1.98 in 2022.
- P/FCFE Ratio Interpretation
- The P/FCFE ratio reflects the volatility of the underlying components. In 2019, the ratio reached a period low of 2.95, driven by the surge in FCFE. Conversely, the ratio spiked to 95.19 in 2021, the result of a simultaneous peak in share price and a trough in FCFE per share. By 2022, the ratio compressed to 33.71 as FCFE began to recover and the share price softened.
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