It has been about a month since the last earnings report for Monolithic Power (MPWR Quick QuoteMPWR - Free Report) . Shares have lost about 26.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Monolithic Power's Q3 Earnings Beat Estimates, Revenues Rise Y/Y

Monolithic Power reported strong third-quarter 2024 results, with both the top and bottom lines surpassing the Zacks Consensus Estimate. The Kirkland, WA-based company witnessed revenue growth year over year, driven by solid demand trends in all verticals.

Net Income

Net income on a GAAP basis was $144.4 million or $2.95 per share compared with $121.2 million or $2.48 per share in the year-ago quarter. 

Non-GAAP net income increased to $198.8 million or $4.06 per share from $150.3 million or $3.08 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 10 cents.

Revenues

Monolithic Power generated revenues of $620.1 million, up from $474.9 million in the year-ago quarter. The top line beat the Zacks Consensus Estimate of $600 million. 

Storage and Computing revenues were $144 million, up 11.2% year over year owing to higher sales of commercial notebooks. 

Net sales from Enterprise Data improved to $184.5 million from $98.9 million in the year-ago quarter. The rise in both GPU and CPU program sales boosted the top line. 

In the third quarter, the Automotive segment contributed $111.3 million in revenues compared with $95.2 million in the year-ago quarter. 

Industrial revenues were $44.04 million compared with $42.1 million in the year-ago quarter.
 
The Communications vertical reported $71.9 million in revenues compared with $46.8 million in the year-ago quarter. 

Net sales from the Consumer segment increased to $64.4 million from $62.4 million in the year-ago quarter.
 
By product family, revenues in DC-to-DC were $616.1 million, up from $447.4 million in the year-ago quarter, Lighting Control revenues decreased to $4 million from $27.5 million in the prior-year quarter.

Other Details

Non-GAAP gross margin was 55.8%, up from 55.7% reported in the year-ago quarter. Non-GAAP operating expenses were $125.2 million compared with $96.6 million in the prior-year period. Non-GAAP operating income was $220.8 million, up from $167.8 million.

Cash Flow & Liquidity

During the September quarter, the company generated an operating cash flow of $231.7 million. As of Sept. 30, 2024, cash and cash equivalents totaled $700.35 million, with $101.81 million in other long-term liabilities.

Outlook

For the fourth quarter of 2024, the company estimates revenues to be the range of $600-$620 million. Non-GAAP gross margin is expected to be between 55.5% and 56.1%. Non-GAAP operating expenses are projected between $122 million and $124 million. Total stock-based compensation expenses are expected to be in the range of $50.3-$52.3 million.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Monolithic has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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. Notably, Monolithic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.