When Monolithic Power Systems Inc (NASDAQ:MPWR) released its most recent earnings update (30 September 2017), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how Monolithic Power Systems performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see MPWR has performed. Check out our latest analysis for Monolithic Power Systems
Commentary On MPWR’s Past Performance
I use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method allows me to analyze different stocks on a similar basis, using the most relevant data points. For Monolithic Power Systems, its latest earnings (trailing twelve month) is US$69.71M, which, against last year’s figure, has escalated by an impressive 50.70%. Given that these figures are fairly nearsighted, I have determined an annualized five-year figure for MPWR’s earnings, which stands at US$31.19M This means generally, Monolithic Power Systems has been able to steadily grow its earnings over the last few years as well.
How has it been able to do this? Let’s see if it is merely because of industry tailwinds, or if Monolithic Power Systems has experienced some company-specific growth. In the last couple of years, Monolithic Power Systems increased its bottom line faster than revenue by effectively controlling its costs. This brought about a margin expansion and profitability over time. Eyeballing growth from a sector-level, the US semiconductor industry has been growing its average earnings by double-digit 30.95% over the prior twelve months, and a less exciting 5.99% over the past five. This shows that whatever tailwind the industry is profiting from, Monolithic Power Systems is capable of amplifying this to its advantage.
What does this mean?
Though Monolithic Power Systems’s past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research Monolithic Power Systems to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for MPWR’s future growth? Take a look at our free research report of analyst consensus for MPWR’s outlook.
- 2. Financial Health: Is MPWR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.