Microchip to Report Q2 Earnings: What's in Store for the Stock?

Core Insights - Microchip Technology (MCHP) is scheduled to report its second-quarter fiscal 2026 results on November 6, with expected net sales between $1.110 billion and $1.150 billion, indicating a sequential growth of approximately 5.1% [1][7] - The Zacks Consensus Estimate for revenues in the second quarter is $1.13 billion, reflecting a year-over-year decline of 2.74% [1][2] - Anticipated non-GAAP earnings per share (EPS) are projected to be between 30 and 36 cents, with the consensus mark for earnings also at 33 cents, representing a year-over-year decline of 28.26% [1][2] Financial Performance Expectations - Microchip's earnings have historically beaten the Zacks Consensus Estimate in three of the last four quarters, with an average surprise of 0.23% [2] - The company has been facing macroeconomic challenges but is expected to show improved inventory levels, which have decreased from 214 days in the first quarter to an anticipated range of 195 to 200 days by the end of the second quarter [2][3] Revenue and Margin Drivers - Improved inventory levels are expected to positively impact gross margins in the upcoming quarter, with revenues benefiting from inventory corrections at distributors and increased direct customer shipments [3][7] - The company has secured strong design wins in high-growth sectors such as industrial, aerospace, and automotive, which are likely to contribute to revenue growth in the reported quarter [4][7] Earnings Outlook - According to the Zacks model, Microchip has an Earnings ESP of 0.00% and a Zacks Rank of 3, indicating a neutral outlook for earnings performance [5]