Monolithic Up 14% Since Q4 Earnings: Will the Momentum Stay?

A successful investor understands the importance of retaining well-performing stocks in the portfolio at the right time. Indicators of a stock's bullish run include a rise in share price and strong fundamentals. Though there may be some concerns regarding the stock but they are transitory in nature.

Monolithic Power Systems Inc.MPWR is one such technology stock that has been on healthy growth trajectory, post fourth-quarter 2017 earnings. It has rallied 34% year over year, outperforming 20.5% growth recorded by the industry it belongs to.

Upbeat Q4 Results

Monolithic Power delivered fourth-quarter earnings of 82 cents, which beat the Zacks Consensus Estimate by a penny. The figure surged 26.2% from the year-ago quarter.

Revenues jumped 24% from the year-ago quarter to almost $129.4 million, better than the Zacks Consensus Estimate of $126 million. The figure was better than management's guidance of $123-$129 million.

For the first quarter of 2017, Monolithic Power forecasts revenues in the range of $122-$128 million. The Zacks Consensus estimates for revenues is pegged at $125.2 million.

Positive Earnings Surprise History

Monolithic Power has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, recording a positive average earnings surprise of 1.73%.

Further, it has a long-term expected EPS growth rate of 18%.

Upward Estimate Revisions

Over the last 60 days, fiscal 2018 estimates were revised upward, taking the Zacks Consensus Estimate up from $3.65 to $3.69 per share.

Other Growth Drivers

The increasing demand for analog Integrated Circuit ("IC") and sensors and deep-rooted partnerships with leading auto suppliers are driving the company's top-line. Monolithic Power expects its Served Addressed Market ("SAM") for the automotive industry to expand significantly, which will boost revenues.

We expect the company to benefit from the ongoing Grantley to Purley platform conversion in the server market as well as from increased demand for servers due to the ongoing adoption of cloud computing.

Monolithic Power is also making use of artificial intelligence (AI) to predict user performance and enhance e-commerce platform. This will help users to input desired products and specific needs. This customer centric approach will not only expand customer base but also help the company penetrate the small and medium business segment.

Zacks Rank and Key Picks

Monolithic Power currently carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA , Facebook, Inc. FB and Paycom Software, Inc. PAYC , all of which sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

NVIDIA, Facebook and Paycom Software have long-term earnings per share growth rate of 10.3%, 26.5% and 25.8%, respectively.

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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.

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