It has been about a month since the last earnings report for Monolithic Power (MPWR Quick QuoteMPWR - Free Report) . Shares have lost about 8.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Monolithic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Monolithic Power Q2 Earnings & Revenues Beat Estimates

Monolithic Power reported reported second-quarter 2022 non-GAAP earnings of $3.25 per share, which beat the Zacks Consensus Estimate by 10.5%. The bottom line improved 79.6% on a year-over-year basis.

Quarter Details

Revenues of $461 million rose 57.2% from the year-ago quarter’s figure and surpassed the Zacks Consensus Estimate by 7.2%. On a sequential basis, the top line grew 22.1%. Strong demand across all six end markets drove the year-over-year growth.

Segment Performance

In the first quarter, the company had reorganized its markets and segregated Computing and Storage into two — Storage and Computing, and Enterprise Data.

Storage and Computing (26.5% of total revenues) revenues increased 111.6% year over year to $122.3 million. The performance was driven by an increase in market share for storage applications.

Enterprise Data (14.1%) revenues were $65.2 million, up 117.9% from the prior-year quarter’s figure.

Automotive (13.2%) revenues were $61 million, up 25.3% from the prior-year quarter’s figure. The company is witnessing sales growth in infotainment, lighting and Advanced Driver Assistance Systems products.

Industrial (12.1%) revenues increased 28.9% year over year to $55.9 million, courtesy of higher industrial meters and power sources sales.

Communications (12.9%) revenues grew 58.3% to $59.2 million.

Consumer (21.1%) revenues moved up 27.9% from the year-ago quarter to $97.3 million.

By product family, revenues in DC to DC (96% of total revenues) surged 58.6% year over year to $442.3 million. Lighting Control (4%) revenues rallied 29.3% to $18.8 million.

Other Details

Non-GAAP gross margin expanded 270 basis points (bps) from the year-ago quarter’s level to 59%. Non-GAAP operating expenses amounted to $92.7 million, up 31.9%. Non-GAAP operating income rose 89% year over year to $179.4 million.

As of Jun 30, 2022, the company had $342.9 million in cash and cash equivalents with $60.7 million of other long-term liabilities.

Outlook

The company continues to execute its long-term plan for sustainable growth. For the third quarter, it projects revenues between $480 million and $500 million. Non-GAAP gross margin is expected between 58.7% and 59.3%. The company is investing in markets like industrial, server and communications that have strong growth potential over the long term. The company is also engaged in the development of its e-commerce platform. However, it faces significant competition in the analog market. Its highly cyclical business is exposed to rapid product obsolescence and short product life cycles.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 12.77% due to these changes.

VGM Scores

At this time, Monolithic has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Monolithic has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.