Will Lower Revenues Hurt Monolithic Power (MPWR) Q4 Earnings?
Monolithic Power Systems, Inc. MPWR is scheduled to report fourth-quarter 2023 results on Feb 7, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 0.33%. It pulled off a trailing four-quarter earnings surprise of 0.58%, on average.
The Kirkland, WA-based company is likely to report lower revenues year over year in the fourth quarter. Fluctuating ordering patterns across the broader market, owing to business uncertainty, is expected to have had a negative impact on the top line. A cautious approach from customers due to rising geopolitical volatility and macroeconomic headwinds is a major concern. However, healthy traction in the Enterprise Data segment and focus on portfolio expansion across multiple end markets are positive factors.
Factors at Play
Monolithic Power is witnessing strong momentum in the Enterprise Data vertical. The company is expected to have gained from an uptick in demand for GPUs and CPUs. Specifically, the shifting preference toward AI GPU boasts solid growth opportunity in the long term. The company is also developing its greenfield product lineup across all segments. During the quarter, it launched a wide range of solutions attributed to various end markets, including power modules, automotive, sensors, EV kits and EV boards, Motor Drivers & Motor Controllers, inductors and more.
The company's strategic focus on achieving excellence in efficiency, reliability and other performance metrics across its entire product portfolio is expected to benefit its fourth-quarter results.
Despite these positive trends, a slowdown in sales for Advanced Driver Assistance Systems and digital cockpit products are likely to have dented its revenues. Monolithic Power is facing delays in client orders. A cautious approach from clients, owing to the persistence of business uncertainty, is hurting net sales. The lack of geographical diversity in terms of the end market is a significant headwind.
The Zacks Consensus Estimate for net sales in the Communication segment is pegged at $41.71 million, suggesting a sharp decline from $64.28 million in the year-ago quarter. Contribution from the consumer vertical is expected to be $54.23 million, implying marginal growth from $53.02 million reported in the year-ago quarter.
The Zacks Consensus Estimate for net sales from the Industrial vertical is pegged at $36.96 million, suggesting a reduction from $56.06 million reported in the prior-year quarter. The consensus estimate for revenues from the Enterprise Data vertical is pegged at $109.76 million, implying healthy growth from $68.43 million in the year-ago quarter.
Revenues from the storage and computing vertical are expected to be $113.61 million, indicating a decrease from the prior-year quarter’s tally of $120.84 million. Net sales from the automotive vertical are pegged at $95.72 million, indicating a decline from $97.38 million reported in the year-ago quarter.
For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $452 million, suggesting a decline from $460 million reported in the year-ago quarter. The consensus estimate for adjusted earnings per share is pegged at $2.85, implying a decrease from $3.17 reported in the prior-year quarter.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Monolithic Power this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $2.85. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Monolithic Power Systems, Inc. Price and EPS Surprise
Monolithic Power Systems, Inc. price-eps-surprise | Monolithic Power Systems, Inc. Quote
Zacks Rank: Monolithic Power currently has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
InterDigital, Inc. IDCC is set to release quarterly numbers on Feb 15. It has an Earnings ESP of +1.93% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for NVIDIA Corporation NVDA is +3.68% and it sports a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 21.
The Earnings ESP for Silicon Motion Technology Corporation SIMO is +4.92% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Feb 6.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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