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Will Top-Line Expansion Aid Monolithic Power (MPWR) Q1 Earnings?

Monolithic Power Systems, Inc. MPWR is scheduled to report first-quarter 2023 results on May 4, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 1.28%. It pulled off a trailing four-quarter earnings surprise of 5.35%, on average. The Kirkland, WA-based company will likely report higher revenues year over year in the first quarter, backed by its diverse portfolio, adaptability in the face of uncertainty and changing market dynamics.

Factors at Play

Monolithic Power is expanding into new markets such as electric vehicles and renewable energy. These are emerging markets with immense growth prospects and the company has a strong emphasis on innovation of technologies well suited to these markets. For example, Monolithic’s isolated power modules are essential for power management applications and have wide use cases in EVs, plug-in traction inverters, EV chargers, solar power, wind turbines and battery power storage. It is also investing in industrial, server and communications, which has strong growth potential. Portfolio diversification is strengthening the company’s foundation and making it less vulnerable to economic downturns. These initiatives are likely to have a favorable effect on the company’s first-quarter performance.

MPWR is also undertaking initiatives to diversify its global footprint by expanding R&D centers, supply chain partnerships and facilities outside of China. This will improve the robustness of the company’s supply chain networks and is likely to make it less vulnerable to geopolitical and macroeconomic uncertainties stemming from a particular region. Such initiatives are likely to strengthen its position in the semiconductor market and improve the company’s earnings prospects.

Despite macroeconomic uncertainty, Monolithic Power has had a strong financial record in recent times with a strong balance sheet that boasts investors' confidence. The company’s increased spending in research & development to incorporate advanced solutions with loT and AI capabilities could help the company to stay ahead of competitors and attract new customers.  

For the March quarter, the Zacks Consensus Estimate for revenues is pegged at $450 million, indicating growth from the year-ago quarter’s reported figure of $378 million. The consensus estimate for adjusted earnings per share is pegged at $2.99, suggesting an increase from $2.45 reported in the prior-year quarter.

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 0.00% with both pegged at $2.99. 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 has a Zacks Rank #3.

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:

WESCO International, Inc. WCC is set to release quarterly numbers on May 4. It has an Earnings ESP of +3.60% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Jabil, Inc. JBL is +3.38% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Jun 15.

The Earnings ESP for Splunk Inc. SPLK is +12.76% and it sports a Zacks Rank of 1. The company is scheduled to report quarterly numbers on May 24.

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

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WESCO International, Inc. (WCC) : Free Stock Analysis Report

Jabil, Inc. (JBL) : Free Stock Analysis Report

Monolithic Power Systems, Inc. (MPWR) : Free Stock Analysis Report

Splunk Inc. (SPLK) : Free Stock Analysis Report

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