Monolithic Power Systems, Inc. (MPWR) is all set to announce its fourth-quarter 2023 financial results on Feb 7, after the markets close. In the previous quarter, the company managed to exceed earnings expectations by 0.33% and has averaged a trailing four-quarter earnings surprise of 0.58%. However, the Kirkland, WA-based company faces the lurking threat of diminished revenues in its upcoming Q4 report.
The ongoing fluctuation in overall market demand due to business uncertainty may unfavorably affect the company’s quarterly revenues compared to the previous year. Customers exercising caution in the face of geopolitical unrest and macroeconomic challenges could be detrimental to revenue streams. Nevertheless, Monolithic Power exhibits robust progress in the Enterprise Data sector and emphasizes a strategy of product expansion across various end markets.
In the Eye of the Storm
Monolithic Power is riding a wave of momentum in the Enterprise Data field, capitalizing on growing demand for GPUs and CPUs. With a shift towards AI GPU, the company stands to tap promising long-term growth opportunities. Furthermore, Monolithic Power has been actively diversifying its product line, launching a wide range of solutions spanning power modules, automotive, sensors, EV kits, and more across various end markets.
The company’s focus on driving efficiency and reliability across its product line is projected to yield benefits. However, retreating sales figures for Advanced Driver Assistance Systems and digital cockpit products are likely to dent the revenue stream, compounded by delays in client orders due to a cautious approach in the current business landscape.
Revenue Projections and Estimates
Among various segments, Communication is predicted to experience a sharp decline in net sales, from $64.28 million to $41.71 million. While the consumer vertical may see a marginal growth, other segments, such as Industrial and Storage/Computing, are poised to face revenue reductions. Overall, the Zacks Consensus Estimate for revenues in the December quarter is forecasted at $452 million, lower than the $460 million reported a year ago. Similarly, the estimated adjusted earnings per share is projected to decrease to $2.85 from $3.17 in the prior-year quarter.
Earnings Forecast
Despite Monolithic Power’s prior track record, our proven model does not conclusively indicate an earnings beat this time. The absence of a positive Earnings ESP combined with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) diminishes the likelihood of a beat in this instance.
The scenario differs here with the Earnings ESP standing at 0.00%, where both the Most Accurate Estimate and the Zacks Consensus Estimate are at $2.85.
Stocks to Watch
Amid the ebb and flow of earnings season, here are a few alternatives that could potentially post an earnings beat:
• InterDigital, Inc. (IDCC) with an Earnings ESP of +1.93% and a Zacks Rank #2.
• NVIDIA Corporation (NVDA) with an Earnings ESP of +3.68% and a Zacks Rank #2.
• Silicon Motion Technology Corporation (SIMO) with an Earnings ESP of +4.92% and a Zacks Rank #2.