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Monolithic Power (MPWR) Q2 Earnings In Line With Estimates
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Monolithic Power Systems Inc.’s (MPWR - Free Report) 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.
Shares of Monolithic Power have returned 21.2% year to date, substantially outperforming industry’s rally of 1.3%.
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%.
Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise
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%.
We may note that, the Zacks Consensus Estimate for total revenues for the third quarter is pegged at $153.9 million, lower than the lower end of the guided range.
Conclusion
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.
Mellanox, Microsoft and Intel have a long-term earnings growth rate of 15%, 12.3% and 8.4%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Monolithic Power (MPWR) Q2 Earnings In Line With Estimates
Monolithic Power Systems Inc.’s (MPWR - Free Report) 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.
Shares of Monolithic Power have returned 21.2% year to date, substantially outperforming industry’s rally of 1.3%.
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%.
Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise
Monolithic Power Systems, Inc. Price, Consensus and EPS Surprise | Monolithic Power Systems, Inc. Quote
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%.
We may note that, the Zacks Consensus Estimate for total revenues for the third quarter is pegged at $153.9 million, lower than the lower end of the guided range.
Conclusion
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.
Zacks Rank and Stocks to Consider
Monolithic Power carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Mellanox , Microsoft (MSFT - Free Report) and Intel (INTC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mellanox, Microsoft and Intel have a long-term earnings growth rate of 15%, 12.3% and 8.4%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>