Monolithic Power Systems Inc (MPWR): A Deep Dive into Financial Metrics and Competitive Strengths
Monolithic Power Systems Inc (NASDAQ:MPWR) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $455.2, Monolithic Power Systems Inc has witnessed a daily gain of 3.41%, marked against a three-month change of -13.74%. A thorough analysis, underlined by the GF Score, suggests that Monolithic Power Systems Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 10/10
Profitability rank: 10/10
Growth rank: 10/10
GF Value rank: 10/10
Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. GuruFocus assigned Monolithic Power Systems Inc the GF Score of 100 out of 100, which signals the highest outperformance potential.
Understanding Monolithic Power Systems Inc Business
Monolithic Power Systems Inc, with a market cap of $21.75 billion, is an analog and mixed-signal chipmaker, specializing in power management solutions. The firm's mission is to reduce total energy consumption in end systems, and it serves the computing, automotive, industrial, communications, and consumer end markets. MPS uses a fabless manufacturing model, partnering with third-party chip foundries to host its proprietary BCD process technology. The company's sales stand at $1.85 billion with an operating margin of 28.72%.
Financial Strength Breakdown
According to the Financial Strength rating, Monolithic Power Systems Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. Monolithic Power Systems Inc's Interest Coverage ratio is significantly high due to no long-term debt. With an Altman Z-Score of 36.05, Monolithic Power Systems Inc exhibits a strong defense against financial distress. With a favorable Debt-to-Revenue ratio of 0, Monolithic Power Systems Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Monolithic Power Systems Inc's impressive standing among its peers in generating profit. Monolithic Power Systems Inc Operating Margin has increased (50.41%) over the past five years. Furthermore, Monolithic Power Systems Inc's Gross Margin has seen a consistent rise over the past five years. This trend underscores the company's growing proficiency in transforming revenue into profit. Monolithic Power Systems Inc's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Monolithic Power Systems Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 39.3%, which outperforms better than 90.84% of 873 companies in the Semiconductors industry. Moreover, Monolithic Power Systems Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years.
Next Steps
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
