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Monolithic Power (MPWR) Surpasses Q3 Earnings Estimates

Monolithic Power Systems, Inc. MPWR reported solid third-quarter 2022 results with all-time high revenues driven by broad-based growth across most operating segments. Both the bottom line and top line beat the respective Zacks Consensus Estimate with healthy year-over-year growth.

Quarter Details

Net income in the quarter improved to $124.3 million or $2.57 per share from $68.8 million or $1.44 per share a year ago. Excluding non-recurring items, non-GAAP net income in the reported quarter was $170.6 million or $3.53 per share compared with $98.6 million or $2.06 per share in the year-earlier quarter. The bottom line beat the consensus estimate by 4 cents.

The company reported record revenues of $495.4 million, up 53.1% year over year and surpassing the Zacks Consensus Estimate of 495 million. Strong demand across all six end markets drove the robust performance.

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

Monolithic Power Systems, Inc. price-consensus-eps-surprise-chart | Monolithic Power Systems, Inc. Quote

Revenues by End Market

Storage and Computing (22.8% of total revenues) revenues increased 63.9% year over year to $122.3 million. The performance was driven by an increase in market share for storage applications.

Enterprise Data (15.2%) revenues were $75.3 million, up 153.5% from the prior-year tally, driven by continued strength in data center and workstation computing sales.

Automotive (17.6%) revenues were $87.1 million, up 60%, owing to growth in infotainment, lighting and Advanced Driver Assistance Systems products and new platform launches.

Industrial (11.8%) revenues increased 12.5% year over year to $58.7 million, courtesy of higher industrial meters and power sources sales.

Communications (14.6%) revenues grew 61.8% to $72.3 million due to continued infrastructure ramp up.

Consumer (18%) revenues moved up 21.1% from the year-ago quarter to $89.2 million.

By product family, revenues in DC to DC (93.5% of total revenues) surged 50.6% year over year to $463 million. Lighting Control (6.5%) revenues doubled to $32.4 million.

Other Details

Non-GAAP gross margin expanded 120 basis points (bps) from the year-ago quarter’s level to 59%. Non-GAAP operating expenses aggregated $98.4 million, up 25%. Non-GAAP operating income rose 78.7% year over year to $193.7 million.

As of Sep 30, 2022, the company had $316.2 million in cash and cash equivalents with $59.6 million of other long-term liabilities.

Outlook

MPWR continues to execute its long-term plan for sustainable growth. For the fourth quarter, it projects revenues between $450 million and $470 million. Non-GAAP gross margin is expected between 58.3% and 58.9%. 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.

Zacks Rank & Stocks to Consider

MPWR currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TESSCO Technologies Incorporated TESS, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 81.7%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 34.4% since October 2021.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.

Ooma Inc. OOMA, sporting a Zacks Rank #1, delivered an earnings surprise of 28.6%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 27% since April 2021.

Ooma offers communications services and related technologies for businesses and consumers in the United States and Canada. It helps to create powerful connected experiences for businesses and consumers through its smart cloud-based SaaS platform.

Harmonic Inc. HLIT, carrying a Zacks Rank #2, delivered an earnings surprise of 79.3%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 37.1% since March 2021.

Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit internet service to consumers' homes and mobile devices.


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