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Monolithic Power (MPWR) Q4 Earnings & Revenues Top Estimates

Zacks Equity Research
·4 mins read

Monolithic Power Systems, Inc. MPWR reported fourth-quarter 2019 non-GAAP earnings of $1.04 per share, which beat the Zacks Consensus Estimate by almost 1%. Notably, the figure improved 5.1% on a year-over-year basis.

Revenues of $166.8 million improved 8.6% from the year-ago quarter, surpassing the Zacks Consensus Estimate of $163 million. The reported figure was also better than the higher end of management’s guidance of $160 million to $166 million.

Strong demand across Computing & Storage, Automotive and Communications end-markets drove year-over-year growth.



Notably, shares of the company have returned 44.2% in the past year, outperforming the industry's rally of 26.8%.

Quarter in Details

Revenues by Product Family

DC to DC segment (94.5% of total revenues) revenues improved 10.1% year over year to $157.5 million. However, Lighting Control (5.5% of total revenues) declined 12.1% to $9.2 million.

Revenues by End Market

Computing & Storage (33.4% of total revenues) revenues rose 27.8% year over year to $55.6 million.

Consumer (23%) revenues fell 5.7% from the year-ago quarter to $38.4 million.

Industrial (16%) revenues declined 0.7% year over year to $26.7 million.

Automotive (14.5%) revenues were $24.1 million, up 8.6%.

Communications (13.1%) revenues improved 8.5% to almost $21.9 million.

Margins in Detail

Non-GAAP gross margin contracted 10 basis points (bps) from the year-ago quarter to 55.5%. Management had predicted the figure between 55.2% and 55.8%.
 

Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise

 

Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise
Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise

Monolithic Power Systems, Inc. price-consensus-eps-surprise-chart | Monolithic Power Systems, Inc. Quote

Non-GAAP operating expenses were $41.8 million during the reported quarter, up 7.9% year over year. As a percentage of revenues, the figure expanded 110 bps on a year-over-year basis to 25%.

Non-GAAP operating income improved almost 9% year over year to $50.8 million. Non-GAAP operating margin (as a percentage of revenues) expanded 10 bps from the year-ago quarter to 30.5%.

Balance Sheet & Cash Flow

As of Dec 31, 2019, cash, cash equivalents and short-term investments were $455.4 million, up from $418.7 million reported at the end of the previous quarter.

Monolithic Power generated operating cash flow of approximately $61 million compared with $72.4 million in the prior quarter.

Notably, on Feb 5, 2020, Monolithic’s board of directors approved a cash dividend of 50 cents per share, up from 40 cents per share, payable Apr 15, 2020, to shareholders as on Mar 31, 2020.

2019 at a Glance

Monolithic reported total revenues of $627.9 million in 2019, up 7.8% from the figure reported in 2018.

Non-GAAP earnings of $3.88 per share improved 3.7% year over year.

Guidance

For first-quarter 2020, Monolithic Power forecasts revenues between $161 million and $167 million. The Zacks Consensus Estimate for revenues is currently pegged at $158.98 million.

Management anticipates non-GAAP gross margin between 55.4% and 56%.

Conclusion

We believe Monolithic Power has significant prospects on account of robust product portfolio that targets In-Car connectivity and infotainment, advanced driver assistance system (ADAS), and rapid adoption of LED lightings in cars and vehicles. Accelerated deployment of 5G is expected to favor growth in Communications end-market.

Design wins in AI applications and high-end servers hold promise. Increased adoption of point of sales systems, security applications and smart meters bodes well.

Zacks Rank & Other Stocks to Consider

Currently, Monolithic Power sports a Zacks Rank #1 (Strong Buy).

Alteryx AYX, Cirrus Logic CRUS and Garmin GRMN are other top-ranked stocks in the broader computer and technology sector, each flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Cirrus Logic and Garmin is pegged at 39.85%, 15.27% and 7.35%, respectively.

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