Monolithic Power Systems Inc (MPWR, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $596.66, Monolithic Power Systems Inc has witnessed a daily gain of 0.14%, marked against a three-month change of 26%. A thorough analysis, underlined by the GF Score, suggests that Monolithic Power Systems Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 10/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 9/10
Monolithic Power Systems Inc's GF Score is a near-perfect 98 out of 100, indicating a strong potential for outperformance. This score reflects the company's exceptional financial strength, profitability, and growth, while its GF Value rank, though not at the top, still suggests a reasonable alignment with its intrinsic value.
Understanding Monolithic Power Systems Inc Business
Monolithic Power Systems Inc, with a market cap of $28.59 billion and sales of $1.83 billion, is an analog and mixed-signal chipmaker, specializing in power management solutions. The firm's mission is to reduce total energy consumption in end systems, and it serves the computing, automotive, industrial, communications, and consumer end markets. MPS uses a fabless manufacturing model, partnering with third-party chip foundries to host its proprietary BCD process technology. With an operating margin of 28.3%, Monolithic Power Systems Inc's business model has proven to be highly efficient and profitable.
Financial Strength Breakdown
Monolithic Power Systems Inc's Financial Strength rating is a perfect 10/10, showcasing a balance sheet that is resilient against financial volatility. This reflects prudent management of the capital structure and a strategic approach to financial decisions. With no long-term debt, the company's Interest Coverage ratio is significantly high, aligning with Benjamin Graham's preference for companies with a ratio of at least 5. Additionally, an Altman Z-Score of 47.53 indicates a strong defense against financial distress, and a Debt-to-Revenue ratio of 0 solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank of Monolithic Power Systems Inc is another perfect 10/10, demonstrating the company's superior ability to generate profits compared to its peers. The Operating Margin has seen a significant increase over the past five years, and the Gross Margin has also consistently risen, indicating growing efficiency in revenue conversion to profit. The company's Predictability Rank of 4.0 stars out of five further underscores its consistent operational performance.
Growth Rank Breakdown
Monolithic Power Systems Inc's high Growth rank reflects its commitment to business expansion. The company's 3-Year Revenue Growth Rate of 39.3% outperforms 90.54% of companies in the Semiconductors industry. Additionally, the three-year EBITDA growth rate of 65.3 and a five-year rate of 37.7 highlight the company's capability to drive growth and profitability.
Conclusion: A Strong Investment Contender
Considering Monolithic Power Systems Inc's exceptional financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking companies with similar characteristics can explore more options using the GF Score Screen. Monolithic Power Systems Inc's strategic approach to financial management, consistent operational performance, and aggressive growth trajectory make it a compelling investment case for value investors.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
