Stock of the Day

October 16, 2020

Monolithic Power Systems (MPWR)

$661.08
-$28.73 (-4.2%)
Market Cap: $33.65B

About Monolithic Power Systems

Monolithic Power Systems, Inc. engages in the design, development, marketing, and sale of semiconductor-based power electronics solutions for the storage and computing, automotive, enterprise data, consumer, communications, and industrial markets. The company provides direct current (DC) to DC integrated circuits (ICs) that are used to convert and control voltages of various electronic systems, such as cloud-based CPU servers, server artificial intelligence applications, storage applications, commercial notebooks, digital cockpit, power sources, home appliances, 4G and 5G infrastructure, and satellite communications applications. It offers lighting control ICs for backlighting that are used in systems, which provide the light source for LCD panels in computers and notebooks, monitors, car navigation systems, and televisions, as well as for general illumination products. The company sells its products through third-party distributors, value-added resellers, directly to original equipment manufacturers, original design manufacturers, electronic manufacturing service providers, and other end customers. It serves China, Taiwan, South Korea, Europe, Japan, Southeast Asia, the United States, and internationally. Monolithic Power Systems, Inc. was incorporated in 1997 and is headquartered in Kirkland, Washington.

Monolithic Power Systems Bull Case

Here are some ways that investors could benefit from investing in Monolithic Power Systems, Inc.:

  • Monolithic Power Systems, Inc. has a strong market capitalization of $33.41 billion, indicating a robust position in the semiconductor industry, which can attract more institutional investors.
  • The company recently increased its quarterly dividend from $1.25 to $1.56 per share, reflecting a commitment to returning value to shareholders. This represents a 0.91% dividend yield, which can be appealing for income-focused investors.
  • With a net margin of 80.95%, Monolithic Power Systems, Inc. demonstrates exceptional profitability, suggesting efficient management and strong demand for its products.
  • The stock is currently trading around $600.00, which is significantly below its 12-month high of $959.64, potentially offering a buying opportunity for investors looking for undervalued stocks.
  • Analysts have a consensus target price of $866.17, indicating a potential upside for investors, as many analysts have rated the stock as a "Moderate Buy." This suggests confidence in the company's future performance.

Monolithic Power Systems Bear Case

Investors should be bearish about investing in Monolithic Power Systems, Inc. for these reasons:

  • The recent quarterly earnings report showed earnings per share of $3.17, which missed the consensus estimate of $4.01 by $0.84. This shortfall may raise concerns about the company's growth trajectory.
  • The price-to-earnings (P/E) ratio of 18.63, while not excessively high, may indicate that the stock is relatively expensive compared to its earnings, which could deter value investors.
  • Insider selling, such as the CFO's sale of 2,500 shares at $600.00, could signal a lack of confidence in the stock's short-term performance, which may concern potential investors.
  • The price-to-earnings-growth (PEG) ratio of 2.53 suggests that the stock may be overvalued relative to its expected growth rate, which could be a red flag for growth-oriented investors.
  • With a beta of 1.03, the stock's volatility is slightly above the market average, indicating that it may be subject to larger price swings, which could be a risk for more conservative investors.

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