Microchip Technology share (NASDAQ: MCHP) has seen an impressive 8% gain over the past week and is currently trading at around $ 156 per share. The stock rally was driven by the rise in the broader indices, aided by the announcement of a 2-for-1 stock split this week and strong gains for Q1 ’22 (MCHP’s fiscal year ends in March) in early August. Microchip reported sales of $ 1.57 billion, up from $ 1.31 billion in Q1 ’21. The COGS and operating expenses grew much more slowly, resulting in a nearly 1.7-fold increase in operating income to $ 369 million. Despite a tax expense of $ 44 million compared to a tax benefit of $ 34 million for the same period last year, earnings per share rose from $ 0.50 to $ 0.92.
After the recent rally, will Microchip stock continue its uptrend in the coming weeks or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the past decade, the returns on Microchip stock are average just under 4.1% in the next one month (21 trading days) after an increase of 8.1% over the previous one week period (five trading days). But how would those numbers change if you were interested in holding Microchip stock for a shorter or longer period of time? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test them Microchip Technology stock growth after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, a month or even just a day!
MACHINE LEARNING ENGINE – try it yourself:
IF Microchip stock was down -5% over five trading days, THEN Over the next 21 trading days, Microchip stock will move an average of 5.5 percent, with a decent 67.3% probability of a positive return.
Some fun scenarios, frequently asked questions, and the importance of microchip stock movements:
Question 1: After a decline, is the average return on Microchip stock higher?
Consider two situations
Case 1: Microchip stock is down -5% or more in a week
Case 2: Microchip stock rises 5% or more in a week
Is the average return on Microchip stock in the month following Case 1 or Case 2 higher?
Microchip warehouse performs better after case 1, with an average return of 5.5% over the next month (21 trading days) under Case 1 (where the stock just lost 5% the previous week), versus an average return of 1.3% for case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in Case 1 and an average return of only 0.5% for Case 2, as described in our dashboard, which the average return of the S&P 500 after falling or rising.
Try the Trefis machine learning engine mentioned above to see for yourself how Microchip stock is likely to perform after a given profit or loss over a period of time.
Question 2: Is patience worth it?
When you buy and hold Microchip stock, it is expected that the short-term fluctuations will offset over time and the long-term positive trend will benefit you – at least if the company is otherwise strong.
Overall, after the data and calculations of the Trefis Machine Learning Engine, patience pays off for most stocks!
For Microchip stocks, the returns for the next N days after a change of -5% in the last five trading days is listed in the table below along with the returns for the S & P500:
Question 3: What about the average return after an increase if you wait a while?
The average return after an increase is understandably lower than after a decrease, as described in the previous question. Interestingly, however, if a stock has risen in the past few days, avoid short-term bets on most stocks.
Microchip’s returns for the next N days after a 5% change in the last five trading days is listed in the table below along with the returns for the S & P500:
It’s pretty powerful to test the trend for Microchip stock for yourself by changing the inputs on the charts above.
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