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Can Healthy Revenue Growth Aid Monolithic (MPWR) Q4 Earnings?

Monolithic Power Systems, Inc. MPWR is scheduled to report fourth-quarter 2022 results on Feb 8, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 1.15%. It pulled off a trailing four-quarter earnings surprise of 8.37%, on average.

The Kirkland, WA-based company’s strategic vision to neutralize the effects of economic uncertainty on its production capacity combined with rising demand for power devices are expected to have generated high year-over-year revenues in the fourth quarter.

Factors at Play

During the fourth quarter, Monolithic Power inked an agreement with Vanguard International Semiconductor Corporation, a specialized IC foundry service provider, to manufacture power semiconductors. Monolithic aims to enhance its production capacity and efficiency and match the rising customer demand by utilizing Vanguard’s 8-inch (200mm) wafer fabrication capabilities and technical know-how related to IC manufacturing. This move signals the company’s strategic interest in building a resilient network that will enable it to counter supply chain-related headwinds in the semiconductor market.

Building secure and reliable partnerships at key points of the supply chain will help it mitigate the macroeconomic uncertainty to some extent and is likely to ensure long-term benefits for the company. Healthy demand trends across 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 are likely to have translated into higher revenues in the quarter.

However, Monolithic Power’s high dependence on Asian markets is likely to have a negative effect on its revenue as the region’s economic and geopolitical situation remains volatile. Despite recent efforts to diversify, supply chain problems in the semiconductor business are still likely to have an influence on the company's earnings prospects.

For the December quarter, the Zacks Consensus Estimate for revenues is pegged at $460 million, which indicates growth from the year-ago quarter’s reported figure of $337 million. The consensus estimate for adjusted earnings per share is pegged at $3.13, suggesting an increase from $2.12 reported in the prior year.

Earnings Whispers

Our proven model does not predict an earnings beat for Monolithic Power this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.40% with the former pegged at $3.12 and the latter at $3.13. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Monolithic Power Systems, Inc. Price and EPS Surprise


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

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



Zacks Rank: Monolithic Power currently has a Zacks Rank #4.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Cambium Networks Corporation CMBM is set to release quarterly numbers on Feb 16. It has an Earnings ESP of +9.27% and sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for InterDigital, Inc. IDCC is +43.75% and it carries a Zacks Rank of 3. The company is set to report quarterly numbers on Feb 15.

The Earnings ESP for Telephone and Data Systems, Inc. TDS is +2.63% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Feb 16.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Telephone and Data Systems, Inc. (TDS) : Free Stock Analysis Report

InterDigital, Inc. (IDCC) : Free Stock Analysis Report

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