It has been about a month since the last earnings report for Monolithic Power (MPWR). Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Monolithic due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Monolithic Power Systems second-quarter 2018 earnings of 90 cents matched the Zacks Consensus Estimate. However, the figure surged 32.6% on a year-over-year basis.
Revenues of $139.8 million improved 24.6% from the year-ago quarter, near the higher end of management's guidance of $135-$141 million. The reported figure came in line with the Zacks Consensus Estimate.
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 (91.2% of total revenues) revenues increased 24.8% year over year to $127.5 million. Lighting Control (8.8% of total revenues) climbed 22.5% to $12.3 million. End-Market Highlights
Consumer (34.2% of total revenues) revenues grew 8.9% from the year-ago quarter to $47.8 million. Robust adoption of specialty lighting, IoT-based products and other home appliances drove year-over-year growth.
Computing & Storage (26.4% of total revenues) revenues rose 51.1% to $36.9 million. Sales gains in applications, SSD storage, high end notebooks and cloud computing aided segment performance.
Industrial (13.7% of total revenues) revenues surged 27.2% to $19.1 million, primarily due to increased adoption of industrial power supplies.
Automotive (14.6% of total revenues) revenues were $20.3 million, up 58.2%.The upside was driven by higher product sales for applications in safety, infotainment and connectivity application products.
However, Communications (11.1% of total revenues) revenues declined 2.5% to $15.5 million. Operating Details
Non-GAAP gross margin expanded 40 basis points ("bps") year over year to 56% in the reported quarter. Management had predicted the figure in the range of 55.4-56.4%.
Non-GAAP operating expenses were $36.9 million during the quarter, up 18.3% year over year. Management anticipates higher revenues in the coming years. In a bid to capitalize on growth prospects, Monolithic Power has increased investments in its foundry capabilities.
Operating margin expanded 180 bps from the year-ago quarter to 29.6%. Balance Sheet & Cash Flow
Cash, cash equivalents and short-term investments were $313.5 million at the end of second-quarter 2018, up from $307.3 million at the end of the previous quarter.
Monolithic Power generated operating cash flow of about $24.2 million up from $21.9 million in the previous quarter.
Moreover, in the quarter, the company declared a quarterly dividend payment of 30 cents to be paid on Jul 13, 2018 to shareholders on Jun 29, 2018. Guidance
For the third quarter of 2018, Monolithic Power forecasts revenues in the range of $155.5-$161.5 million. Non-GAAP gross margin is projected between 55.6% and 56.6%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Monolithic has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. The stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our style scores.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Monolithic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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