Why Microchip Technology Shares Jumped

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Microchip Technology (NASDAQ: MCHP  ) , a manufacturer of semiconductor products for embedded control applications, jumped as much as 10% after reporting better-than-expected fourth-quarter results and guiding its first-quarter forecast above the consensus.

So what: For the quarter, Microchip relied heavily on sales of its microcontroller products. Sales of these devices, used in smartphones and tablets, rose 22% for the quarter and accounted for close to two-thirds of Microchip's total revenue. Total profit came in at $0.41 for the quarter, $0.04 ahead of the Street's expectation. Looking ahead, Microchip forecast sales growth of 1%-4%, or an implied $420 million to $433 million in revenue, on $0.45-$0.49 in EPS for the first quarter. Both figures easily trump the $417.8 million and $0.42 that Wall Street projected.

Now what: As long as smartphones and tablets remain popular, Microchip's microcontroller sales will continue to grow in importance to the company. Don't also negate that Microchip pays out a considerable portion of its profits as a dividend to shareholders, signaling confidence from management that cash flow should remain strong for quite some time. I can definitely see why shares are higher today and why long-term investors are excited about this company and would encourage tech-savvy investors to dig a bit deeper into Microchip Technology.

Craving more input? Start by adding Microchip Technology to your free and personalized watchlist so you can keep up on the latest news with the company.

A hidden gem in the tech sector?
The amount of data we store every year is growing by a mind-boggling 60% annually! To make sense of this trend and pick out a winner, The Motley Fool has compiled a new report called "The Only Stock You Need to Profit From the NEW Technology Revolution." The report highlights a company that has gained 300% since first recommended by Fool analysts but still has plenty of room left to run. Thousands have requested access to this special free report, and now you can access it today at no cost. To get instant access to the name of this company transforming the IT industry, click here -- it's free.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2245703, ~/Articles/ArticleHandler.aspx, 9/27/2016 6:31:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:00 PM
MCHP $61.32 Up +0.85 +1.41%
Microchip Technolo… CAPS Rating: ***