Microchip Technology Set to Announce Q2 Results Amidst Market Challenges
Microchip Technology (MCHP) will unveil its second-quarter fiscal 2025 earnings on November 5.
For this quarter, Microchip anticipates net sales between $1.12 billion and $1.18 billion. Expected non-GAAP earnings are projected to fall between 40 cents and 46 cents per share.
The Zacks Consensus Estimate for the company’s second-quarter earnings stands at 43 cents per share, a figure that hasn’t changed in the last 60 days. This represents a significant year-over-year decline of 73.46%.
Projected revenues are estimated at $1.15 billion, reflecting a year-over-year drop of 48.93%.
Over the past four quarters, Microchip’s earnings have exceeded the Zacks Consensus Estimate twice and matched expectations in the other two instances, resulting in an average earnings surprise of 0.95%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Microchip Technology’s Price Performance and EPS Surprise
Microchip Technology incorporated price-EPS-surprise chart.
Let’s explore the company’s situation ahead of the announcement:
Current Challenges Facing Microchip Technology
Microchip is facing significant difficulties due to declining demand across various regions, particularly in Europe and the Americas. Both the industrial and automotive markets have been notably weak.
The company has also been undergoing a substantial inventory correction. This has resulted from various supply chain segments adjusting inventory levels downward in response to current market conditions.
Short average lead times have allowed customers to postpone orders, creating a lack of near-term visibility for Microchip. The company has been affected by tax pressures, high-interest rates, and a tough manufacturing environment in the first quarter of fiscal 2025.
Despite these challenges, Microchip’s robust performance in its mixed-signal microcontroller sector is expected to have had a positive impact in the upcoming quarter.
A key growth driver has been the recent expansion of its product line. Notably, the introduction of the PIC32CK family of 32-bit microcontrollers, which includes an integrated Hardware Security Module (HSM), offers designers enhanced security and flexibility.
Moreover, in the stable Aerospace and Defense markets, Microchip has broadened its radiation-tolerant MCU offerings with the introduction of the 32-bit SAMD21RT Arm Cortex -M0+. The company has also launched the Actuation Power Solution, which simplifies the transition to More Electric Aircraft (MEA) in the aviation sector. These initiatives are likely to bolster Microchip’s revenue growth.
Analysis from Zacks’ Model
According to the Zacks model, a positive Earnings ESP paired with a Zacks Rank #1 (Strong Buy), #2 (Buy), or #3 (Hold) can increase the chances of an earnings beat. However, Microchip does not fit this criterion.
The company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell). You can find stocks with better potential to outperform by using our Earnings ESP Filter.
Stock Recommendations for Consideration
The following companies demonstrate the right combination to potentially outperform earnings in their upcoming results:
Arista Networks (ANET) has an Earnings ESP of +0.72% along with a Zacks Rank #2. The company’s shares have surged 66.8% year to date. ANET plans to report its third-quarter 2024 results on November 7.
Fortinet (FTNT) is another strong candidate with an Earnings ESP of +1.25% and currently holds a Zacks Rank #1.
Fortinet shares have risen 34.7% year to date and will announce its third-quarter 2024 results on November 7.
CGI Group (GIB) also stands out with an Earnings ESP of +1.21% and a Zacks Rank of #2 at this time.
CGI Group has seen its shares increase by 3.7% year to date and is set to report its fourth-quarter fiscal 2024 results on November 6.
Zacks’ Expert Insights on High-Growth Stocks
Our analysts have identified five stocks with the best chances of doubling in value soon. Among these, Sheraz Mian, our Director of Research, highlights one stock as having exceptional growth potential.
This top pick has already attracted over 50 million customers with a range of advanced solutions. While not all of our recommendations succeed, this stock could outperform previous Zacks favorites, such as Nano-X Imaging, which rose 129.6% in less than nine months.
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Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
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