As of April 2, 2026, Microchip Technology Inc's estimated intrinsic value ranges from $6.66 to $43.20 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $8.78 | -86.6% |
| Discounted Cash Flow (5Y) | $6.66 | -89.9% |
| Dividend Discount Model (Multi-Stage) | $6.99 | -89.3% |
| Earnings Power Value | $43.20 | -34.1% |
Is Microchip Technology Inc (MCHP) undervalued or overvalued?
With the current market price at $65.60, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Microchip Technology Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.08 | 1.25 |
| Cost of equity | 8.8% | 11.9% |
| Cost of debt | 4.0% | 15.6% |
| Tax rate | 17.0% | 20.9% |
| Debt/Equity ratio | 0.17 | 0.17 |
| After-tax WACC | 8.0% | 12.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $7 | $8,718M | 77.4% |
| 10-Year Growth | $9 | $9,864M | 59.0% |
| 5-Year EBITDA | $14 | $12,909M | 84.7% |
| 10-Year EBITDA | $16 | $13,517M | 70.1% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $2,742M |
| Discount Rate (WACC) | 12.0% - 8.0% |
| Enterprise Value | $22,925M - $34,062M |
| Net Debt | $5,115M |
| Equity Value | $17,810M - $28,947M |
| Outstanding Shares | 541M |
| Fair Value | $33 - $53 |
| Selected Fair Value | $43.20 |
| Metric | Value |
|---|---|
| Market Capitalization | $35499M |
| Enterprise Value | $40614M |
| Trailing P/E | 0.00 |
| Forward P/E | 328.48 |
| Trailing EV/EBITDA | 18.30 |
| Current Dividend Yield | 316.80% |
| Dividend Growth Rate (5Y) | 25.90% |
| Debt-to-Equity Ratio | 0.17 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $2.63 |
| Discounted Cash Flow (5Y) | 29% | $1.66 |
| Dividend Discount Model (Multi-Stage) | 24% | $1.40 |
| Earnings Power Value | 12% | $4.32 |
| Weighted Average | 100% | $11.78 |
Based on our comprehensive valuation analysis, Microchip Technology Inc's intrinsic value is $11.78, which is approximately 82.0% below the current market price of $65.60.
Key investment considerations:
Given these factors, we believe Microchip Technology Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.