Monolithic (MPWR) Up 4.4% Since Last Earnings Report: Can It Continue?

A month has passed since the last earnings report of Monolithic Power (MPWR). Shares have risen about 4.4% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Monolithic headed for a recession? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Monolithic Power’s first-quarter earnings beat higher revenues

Monolithic reported strong first-quarter 2024 results, with the bottom and top lines exceeding the respective Zacks Consensus Estimates. Despite downward trends in several industries, the Kirkland, Wash.-based company reported moderate year-over-year revenue growth, supported by strong momentum in its Enterprise Data division.

Net income

GAAP net income was $92.5 million, or $1.89 per share, compared to $109.8 million, or $2.26 per share, in the year-ago quarter. The decline in net profit was primarily due to higher operating costs.

Non-GAAP net income fell to $137.5 million, or $2.81 per share, from $146 million, or $3 per share, in the prior-year quarter. However, the earnings beat the Zacks Consensus Estimate by 15 cents.

Revenue

Monolithic Power generated revenue of $457.9 million, up from $451.1 million in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $448 million. Growth in enterprise data is mostly offset by weakness in the consumer, telecom and industrial verticals.

Data storage and processing revenues were $106.1 million, down 11.4% year over year. Lower sales of warehouse solutions products impacted net sales in this division. Revenues missed the Zacks Consensus Estimate of $109 million.

Enterprise Data net sales increased to $149.7 million from $47.2 million in the year-ago quarter, supported by growing sales of server solutions. Revenues surpassed the Zacks Consensus Estimate of $145 million.

In the first quarter, the automotive segment generated revenue of $87.1 million compared to $105.3 million in the same quarter last year. Lower sales of digital dashboards affected revenues in this segment. The top line surpassed the Zacks Consensus Estimate of $83 million.

Industry revenue was $30.2 million compared to $47.5 million in the same quarter last year. Weak demand for POS applications negatively impacted the segment’s revenues. The top line missed the Zacks Consensus Estimate of $30.95 million.

The communications division reported revenue of $46.7 million, compared to $67.9 million in the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $39.88 million.

Net sales in the consumer segment fell to $38.1 million from $63.4 million in the year-ago quarter. Lower gaming revenues impacted results. Net sales slightly beat the Zacks Consensus Estimate of $39.24 million.

By product family, DC-DC segment revenues were $416 million, compared to $425.2 million in the prior-year quarter. In the first quarter, Lighting Control’s revenue increased to $41.9 million from $25.9 million in the prior-year quarter.

The story continues

Other details

Non-GAAP gross margin was 55.7%, compared to 57.7% reported in the prior-year quarter. Non-GAAP operating expenses were $103.4 million, compared to $96 million reported in the prior year. Non-GAAP operating income was $151.6 million, compared to $164.1 million in the prior-year quarter.

Cash flow and liquidity

The company generated operating cash flow of $248 million in the March quarter. As of March 31, 2024, total cash and cash equivalents amounted to USD 488.3 million, including USD 86.9 million of other long-term liabilities.

Perspectives

For the second quarter of 2024, the company estimates revenues in the range of USD 480-500 million. Non-GAAP gross margin is expected to be between 55.4% and 56%. Non-GAAP operating expenses are forecast to range from $106.1 million to $108.1 million. Total stock-based compensation costs are expected to range from $43.2 million to $45.2 million.

How have estimates changed since then?

It turns out that estimate revisions have been trending upwards over the past month.

VGM results

Currently, Monolithic has a great growth rate of A, although it lags well behind its Momentum Score of D. Plotting a somewhat similar path, the stock is rated F on the value side, putting it in the bottom quintile for this investment strategy.

Overall, the stock has a Total VGM Score of C. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. Notably, Monolithic carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Monolithic belongs to the Zacks Semiconductor – Analog and Mixed industry. Another stock in the same industry, NXP Semiconductors (NXPI), has gained 6.8% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

NXP reported revenue of $3.13 billion in its most recently reported quarter, representing a year-over-year change of +0.2%. EPS of $3.24 in the same period compared to $3.19 a year ago.

NXP is expected to report earnings per share of $3.20 for the current quarter, representing a year-over-year change of -6.7%. Over the past 30 days, the Zacks Consensus Estimate has moved -0.2%.

NXP has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Rating of C.

Want the latest recommendations from Zacks Investment Research? Today you can download the top 7 stocks for the next 30 days. Click to get this free report

Monolithic Power Systems, Inc. (MPWR): Free Inventory Analysis Report

NXP Semiconductors NV (NXPI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research