Markets

Monolithic (MPWR) Stock Falls Despite Q4 Earnings Beat

Shares of Monolithic Power Systems Inc.MPWR declined more than 3% in the last couple of trading sessions following the company's fourth-quarter 2016 results. The fall apparently exhibited investor disappointment in first-quarter 2017 guidance, which forecasts revenue decline on a sequential basis.

The company reported adjusted earnings (including stock-based compensation) of 40 cents per share, which beat the Zacks Consensus Estimate by a nickel. Notably, the company registered an earnings beat after two consecutive misses.

Moreover, earnings (excluding stock-based compensation) surged 27.5% from the year-ago quarter to 65 cents per share. The year-over-year growth in earnings was primarily driven by top-line growth and margin expansion.

Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise

Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise | Monolithic Power Systems, Inc. Quote

Revenues advanced 19.2% year over year to $103.6 million. Gross and operating margin expanded 50 basis points (bps) and 600 bps, respectively driven by higher top-line base and stringent cost control measures.

In 2016, earnings climbed 21.7% to $2.30 per share driven by revenue growth of 16.7%, which totaled $388.7 million. The company stated that the year-over-year revenue growth compared favorably with the analog industry, which SIA estimates grew 5.8% over 2015.

However, we note that the revenue growth failed to boost share price return in the last one year. Monolithic (up 52.4%) has unperformed the Zacks Semiconductor - Analog & Mixed industry (58.9%) in the same period.

Segment Details

In terms of end-market, Consumer (36.6% of total revenue) revenues dipped 1.6% to almost $38 million. However, Industrial (24.3%), Storage and Computing (22.6%) and Communications (16.5%) increased 40.5%, 60.8% and 7.6% to $25.2 million, $23.4 million and $17 million, respectively.

In terms of product family, DC to DC (90.7% of revenue) improved 21.2% to nearly $94 million. Lighting control revenues increased 2.5% from the year-ago quarter to $9.6 million.

Guidance

Monolithic forecasts revenues in the range of $98-$102 million for first-quarter 2017, which reflects a sequential decline of 5.4-1.5%.

Non-GAAP gross margin is anticipated to be in the range of 54.8-55.8%. R&D and SG&A expenses are expected to be approximately $28.3 million and $30.3 million.

Zacks Rank & Key Picks

Monolithic carries a Zacks Rank #3 (Hold). Better-ranked stocks are Microchip MCHP , Silicon Laboratories SLAB and Maxim MXIM . While both Microchip and Silicon sports a Zacks Rank #1 (Strong Buy), Maxim carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Long-term earnings growth rate for Microchip, Silicon and Maxim is currently pegged at 12.46%, 12.50% and 10.25%, respectively.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks - absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Maxim Integrated Products, Inc. (MXIM): Free Stock Analysis Report

Microchip Technology Incorporated (MCHP): Free Stock Analysis Report

Silicon Laboratories, Inc. (SLAB): Free Stock Analysis Report

Monolithic Power Systems, Inc. (MPWR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

MCHP SLAB MXIM MPWR

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More