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Monolithic Power (MPWR) Q4 Earnings & Revenues Top Estimates

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Zacks Equity Research
·4 min read
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Monolithic Power Systems, Inc. MPWR reported fourth-quarter 2020 non-GAAP earnings of $1.31 per share, which beat the Zacks Consensus Estimate by 5.65%. Notably, the bottom line surged 26% on a year-over-year basis.

Revenues of $233 million climbed 39.8% from the year-ago quarter’s figure and surpassed the Zacks Consensus Estimate by 3.22%. On a sequential basis, the top line declined 10.2%. The reported figure was also above the higher end of management’s guidance of $218-$230 million.

Strong demand across each of the end-markets, and a diversified multi-market strategy drove year-over-year growth.

Quarter in Details

Revenues by Product Family

Revenues in the DC to DC segment (94.4% of total revenues) climbed 39.6% year over year to $219.9 million. Moreover, Lighting Control (5.6% of total revenues) revenues improved 42.3% to $13.1 million.

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

Revenues by End Market

Computing & Storage (26% of total revenues) revenues increased 11.1% year over year to $61.8 million. The market’s solid performance was driven by broad-based sales strength, solid uptick in data center servers on growing clout of cloud computing, and storage, and high-end notebooks.

Consumer (28%) revenues rallied 69.7% from the year-ago quarter to $65.1 million, reflecting gains from solid uptake of wearables, gaming consoles, and home-focused IoT applications.

Industrial (16%) revenues surged 38.8% to $37.1 million courtesy of strong performance of power devices.

Automotive (17%) revenues were $39.4 million, up 63.1% from the prior-year figure. Normalizing order levels following easing of coronavirus crisis-induced shutdowns of major automotive OEMs led to improvement in business. The company has won design deals in infotainment, smart lighting, ADAS, which is expected to boost performance in the quarters ahead.

Communications (13%) revenues advanced 35.6% to $29.7 million. The end-market benefited from infrastructure-based production ramp up.

Margins in Detail

Non-GAAP gross margin expanded 20 basis points (bps) from the year-ago quarter’s level to 55.7%. Management had predicted the figure between 55.4% and 56%.

Non-GAAP operating expenses amounted to $63.6 million during the reported quarter, up 52.3% year over year. As a percentage of revenues, the figure expanded 230 bps on a year-over-year basis to 27.3%.

Non-GAAP operating income improved 30.5% year over year to $66.3 million. Non-GAAP operating margin (as a percentage of revenues) contracted 200 bps from the year-ago quarter’s level to 28.4%.

Balance Sheet & Cash Flow

As of Dec 31, 2020, cash, cash equivalents and short-term investments were $598 million, compared with $551.5 million reported as of Sep 30, 2020.

Monolithic Power generated operating cash flow of $79.6 million compared with $77.4 million in the prior quarter.

On Feb 4, 2021, the company also announced a 20% increase in the quarterly cash dividend from 50 cents per share to 60 cents per share. The first quarter dividend of 60 cents per share is payable on Apr 15, 2021 to shareholders as on Mar 31, 2021.

Encouraging Q1 Guidance

For first-quarter 2021, the company projects revenues between $236 million and $248 million. The Zacks Consensus Estimate for revenues is currently pegged at $216.59 million, which indicates growth of 30.65% from the year-ago reported figure.

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

Conclusion

We believe that Monolithic Power has significant prospects on account of increased demand for storage and computing, and data centers and cloud due to COVID-19-induced work-from-home trend.

Also, demand recovery across automotive end market is a tailwind.

Zacks Rank & Stocks to Consider

Currently, Monolithic Power carries a Zacks Rank #3 (Hold).

Some better-ranked stocks worth considering are Take Two Interactive TTWO, CDW Corporation CDW, and CrowdStrike CRWD. All stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Take Two Interactive, CDW and CrowdStrike are scheduled to release earnings on Feb 8, Feb 10, and Mar 16, respectively.

Long term earnings growth rate for Take Two Interactive, CDW, And CrowdStrike are currently pegged at 11.98%, 13.1% and 25%, respectively.

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