Monolithic Power Systems Inc. 's MPWR third-quarter 2018 earnings of $1.06 per share beat the Zacks Consensus Estimate by a penny. The figure also surged 26.2% on a year-over-year basis.
Revenues of $160 million improved 24.1% from the year-ago quarter, coming near the higher end of management's guidance of $155.5-$161.5 million. The reported figure surpassed the Zacks Consensus Estimate of $159 million.
Robust demand in high-end consumer markets, including the likes of Internet of Things ("IoT") based products, lighting and home appliances, aided growth. The company's strategic business mix in diversified markets is also a positive.
DC to DC segment (92.3% of total revenues) revenues increased 24% year over year to $147.7 million. Lighting Control (7.7% of total revenues) climbed 24.3% to $12.2 million.
Shares of Monolithic Power have returned 0.22% year to date, against the industry 's decline of 23.6%.
Computing & Storage (29.8% of total revenues) revenues rose 64.2% to $47.7 million. Sales gains in applications, SSD storage, high end notebooks and cloud computing aided segment performance.
Industrial (15.5% of total revenues) revenues surged 52.1% to $24.9 million, primarily due to increased adoption of industrial power supplies.
Automotive (12.4% of total revenues) revenues were $19.8 million, up 53.9%.The upside can be attributed to higher product sales for applications in safety, infotainment and connectivity application products.
Communications (11.9% of total revenues) revenues increased 24.6% to $3.8 million.
However, Consumer (30.4% of total revenues) revenues declined 12.4% from the year-ago quarter to $48.5 million. The decline can be attributed to geopolitical or trade policy changes.
Non-GAAP gross margin expanded 40 basis points ("bps") year over year to 56.1% in the reported quarter. Management had predicted the figure in the range of 55.6-56.6%.
Non-GAAP operating expenses were $40.5 million during the quarter under review, up 23% year over year. Management anticipates higher revenues in the coming years.
Non-GAAP operating margin expanded 50 bps from the year-ago quarter to 30.7%.
Balance Sheet & Cash Flow
Cash, cash equivalents and short-term investments were $347.8 million at the end of third-quarter 2018, up from $313.5 million at the end of the previous quarter.
Monolithic Power generated operating cash flow of about $52.2 million up from $25.4 million in the previous quarter.
Moreover, in the quarter, the company declared a quarterly dividend payment of 30 cents to be paid on Oct 12, 2018 to shareholders.
For the fourth quarter of 2018, Monolithic Power forecasts revenues in the range of $151-$157 million. Non-GAAP gross margin is projected between 55.6% and 56.6%.
We may note that, the Zacks Consensus Estimate for total revenues for the fourth quarter is pegged at $153.2 million.
We believe Monolithic Power has strong growth potential owing to its 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.
However, the company faces significant competition in the highly fragmented analog market.
Monolithic Power carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader technology sector are NetApp, Inc. NTAP , Salesforce.com Inc CRM and Upland Software, Inc. UPLD , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
NetApp, Salesforce and Upland Software have a long-term earnings growth rate of 14.1%, 25% and 20%, respectively.
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