DCF Studio

    MCHP · NMS · Technology

    Microchip Technology Incorporated

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 40.39

    Market price

    USD 76.11

    Implied upside

    -46.9%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-03-31

    Current EV/EBITDA of 38.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 40.39-46.9%
    Exit multiple
    USD 87.66+15.2%
    Market price
    USD 76.11

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 6.4bnUSD 7.5bnUSD 8.5bnUSD 9.6bnUSD 10.7bnUSD 11.7bnUSD 12.6bnUSD 13.4bnUSD 13.9bnUSD 14.3bn+9.3%
    EBITUSD 1.4bnUSD 1.7bnUSD 1.9bnUSD 2.2bnUSD 2.4bnUSD 2.6bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.2bn+9.3%
    NOPATUSD 1.1bnUSD 1.3bnUSD 1.5bnUSD 1.7bnUSD 1.9bnUSD 2.1bnUSD 2.2bnUSD 2.4bnUSD 2.5bnUSD 2.5bn+9.3%
    Add depreciation & amortisationUSD 880.9mUSD 1.0bnUSD 1.2bnUSD 1.3bnUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+9.3%
    Less capital expenditureUSD -228.8mUSD -312.8mUSD -411.9mUSD -525.2mUSD -650.8mUSD -785.4mUSD -924.7mUSD -1.1bnUSD -1.2bnUSD -1.3bn+21.4%
    Capex, % of revenue3.6%4.2%4.8%5.4%6.1%6.7%7.3%8.0%8.6%9.2%-
    Less increase in working capitalUSD -557.1mUSD -344.6mUSD -358.5mUSD -362.2mUSD -353.9mUSD -332.4mUSD -296.9mUSD -247.8mUSD -186.4mUSD -114.8m-16.1%
    Free cashflow to firmUSD 1.2bnUSD 1.7bnUSD 1.9bnUSD 2.2bnUSD 2.4bnUSD 2.6bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.1bn+10.7%
    Discount factor0.95020.85790.77450.69930.63130.57000.51460.46460.41950.3787-
    Present valueUSD 1.2bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.4bnUSD 1.4bnUSD 1.3bnUSD 1.2bn-
    Present Value Of The ForecastUSD 13.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.571Reported 1.852, pulled toward 1.0 (Blume)
    Cost of equity11.54%Risk-free + beta x equity risk premium
    Cost of debt6.27%Risk-free + 138bp, the spread for a BB+ rating at 2.5x interest cover. Book interest / average debt was lower, at 3.8%.
    Market capitalisationUSD 41.3bn88.2% of capital
    Total debtUSD 5.5bn11.8% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.76%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 40.39

    49% of EV

    Forecast FCFF, final year
    USD 3.1bn
    Capex at depreciation, working capital in reinvestment
    USD 3.7bn
    Less reinvestment at g/ROIC (23.2% of NOPAT)
    USD -870.2m
    Capitalised
    USD 2.9bn
    ROIC (WACC floor)
    10.8%
    Terminal value, undiscounted
    USD 35.7bn
    Terminal value, discounted
    USD 13.5bn
    Enterprise value
    USD 27.3bn
    Less net debt
    USD 5.3bn
    Equity value
    USD 22.0bn

    Exit at 20.0x EBITDA

    Value per shareUSD 87.66

    74% of EV

    Terminal value, undiscounted
    USD 103.7bn
    Terminal value, discounted
    USD 39.3bn
    Enterprise value
    USD 53.1bn
    Less net debt
    USD 5.3bn
    Equity value
    USD 47.8bn

    Spread between methods: 74%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.76%55.9155.5555.2555.0154.87
    9.76%47.5046.8446.1745.5144.84
    10.76%41.5340.9640.3939.8239.25
    11.76%36.6036.1135.6135.1234.63
    12.76%32.4832.0431.6131.1830.75

    Outlined: this model. Green text: above today's price of 76.11. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-17.6%11.7%19.3%
    EBIT margin36.9%22.5%45.5%
    Discount rate-10.8%7.3%
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.