Microchip Technology Gross Profit vs. Return On Equity

MCP Stock  EUR 59.20  0.94  1.61%   
Based on the key profitability measurements obtained from Microchip Technology's financial statements, Microchip Technology Incorporated may not be well positioned to generate adequate gross income at the moment. It has a very high risk of underperforming in January. Profitability indicators assess Microchip Technology's ability to earn profits and add value for shareholders.
For Microchip Technology profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Microchip Technology to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Microchip Technology Incorporated utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Microchip Technology's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Microchip Technology Incorporated over time as well as its relative position and ranking within its peers.
  
Check out Correlation Analysis.
For more detail on how to invest in Microchip Stock please use our How to Invest in Microchip Technology guide.
Please note, there is a significant difference between Microchip Technology's value and its price as these two are different measures arrived at by different means. Investors typically determine if Microchip Technology is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Microchip Technology's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

Microchip Technology Return On Equity vs. Gross Profit Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Microchip Technology's current stock value. Our valuation model uses many indicators to compare Microchip Technology value to that of its competitors to determine the firm's financial worth.
Microchip Technology Incorporated is considered to be number one stock in gross profit category among its peers. It also is considered to be number one stock in return on equity category among its peers . The ratio of Gross Profit to Return On Equity for Microchip Technology Incorporated is about  13,010,526,316 . The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Microchip Technology's earnings, one of the primary drivers of an investment's value.

Microchip Return On Equity vs. Gross Profit

Gross Profit is the most basic measure of business operational efficiency. It is simply the difference between sales revenue and the cost associated with making a product or providing a service. It is calculated before deducting administrative expenses, taxes, and interest payments.

Microchip Technology

Gross Profit

 = 

Revenue

-

Cost of Revenue

 = 
4.45 B
Gross Profit varies significantly from one sector to another and tells an investor how much money a business would have made if it didn't have to pay any overhead expenses such as salary, taxes, or rent.
Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.

Microchip Technology

Return On Equity

 = 

Net Income

Total Equity

 = 
0.34
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.

Microchip Return On Equity Comparison

Microchip Technology is currently under evaluation in return on equity category among its peers.

Microchip Technology Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Microchip Technology, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Microchip Technology will eventually generate negative long term returns. The profitability progress is the general direction of Microchip Technology's change in net profit over the period of time. It can combine multiple indicators of Microchip Technology, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Microchip Technology Incorporated develops, manufactures, and sells semiconductor products for various embedded control applications in the Americas, Europe, and Asia. Microchip Technology Incorporated was founded in 1989 and is headquartered in Chandler, Arizona. MICROCHIP TECH operates under Semiconductors classification in Germany and is traded on Frankfurt Stock Exchange. It employs 18286 people.

Microchip Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Microchip Technology. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Microchip Technology position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Microchip Technology's important profitability drivers and their relationship over time.

Use Microchip Technology in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Microchip Technology position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Microchip Technology will appreciate offsetting losses from the drop in the long position's value.

Microchip Technology Pair Trading

Microchip Technology Incorporated Pair Trading Analysis

The ability to find closely correlated positions to Microchip Technology could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Microchip Technology when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Microchip Technology - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Microchip Technology Incorporated to buy it.
The correlation of Microchip Technology is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Microchip Technology moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Microchip Technology moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Microchip Technology can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your Microchip Technology position

In addition to having Microchip Technology in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.

Did You Try This Idea?

Run Processed Foods Thematic Idea Now

Processed Foods
Processed Foods Theme
Companies producing and distributing processed foods to retail sectors. The Processed Foods theme has 45 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize Processed Foods Theme or any other thematic opportunities.
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Other Information on Investing in Microchip Stock

To fully project Microchip Technology's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Microchip Technology at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Microchip Technology's income statement, its balance sheet, and the statement of cash flows.
Potential Microchip Technology investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Microchip Technology investors may work on each financial statement separately, they are all related. The changes in Microchip Technology's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Microchip Technology's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.