MONOLITHIC POWER SYSTEMS INC (NASDAQ:MPWR)—Positioned as a High-Growth Stock, Ready for a Potential Breakout.

For growth-minded investors, high revenue and EPS growth are key criteria. Today, we'll examine whether MONOLITHIC POWER SYSTEMS INC (NASDAQ:MPWR) fits the bill for growth investing, particularly as it forms a base and hints at a potential breakout. Remember, due diligence is essential, but MONOLITHIC POWER SYSTEMS INC has caught our attention on our screen for growth with base formation. It may warrant additional investigation.

Deciphering MPWR's Growth Rating

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of MPWR, the assigned 8 reflects its growth potential:

• The Earnings Per Share has grown by an nice 19.95% over the past year.
• Measured over the past years, MPWR shows a very strong growth in Earnings Per Share. The EPS has been growing by 29.50% on average per year.
• MPWR shows a strong growth in Revenue. In the last year, the Revenue has grown by 21.20%.
• The Revenue has been growing by 28.58% on average over the past years. This is a very strong growth!
• MPWR is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 19.18% yearly.
• The Revenue is expected to grow by 16.81% on average over the next years. This is quite good.

How do we evaluate the Health for MPWR?

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. MPWR scores a 9 out of 10:

• MPWR has an Altman-Z score of 33.46. This indicates that MPWR is financially healthy and has little risk of bankruptcy at the moment.
• With an excellent Altman-Z score value of 33.46, MPWR belongs to the best of the industry, outperforming 96.33% of the companies in the same industry.
• There is no outstanding debt for MPWR. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• A Current Ratio of 5.31 indicates that MPWR has no problem at all paying its short term obligations.
• MPWR has a Current ratio of 5.31. This is in the better half of the industry: MPWR outperforms 78.90% of its industry peers.
• MPWR has a Quick Ratio of 3.89. This indicates that MPWR is financially healthy and has no problem in meeting its short term obligations.
• Looking at the Quick ratio, with a value of 3.89, MPWR is in the better half of the industry, outperforming 73.39% of the companies in the same industry.

Looking at the Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. MPWR was assigned a score of 9 for profitability:

• The Return On Assets of MPWR (49.40%) is better than 97.25% of its industry peers.
• MPWR has a better Return On Equity (56.80%) than 96.33% of its industry peers.
• MPWR has a Return On Invested Capital of 13.73%. This is amongst the best in the industry. MPWR outperforms 86.24% of its industry peers.
• The Average Return On Invested Capital over the past 3 years for MPWR is significantly above the industry average of 11.16%.
• The 3 year average ROIC (19.13%) for MPWR is well above the current ROIC(13.73%). The reason for the recent decline needs to be investigated.
• Looking at the Profit Margin, with a value of 80.95%, MPWR belongs to the top of the industry, outperforming 99.08% of the companies in the same industry.
• In the last couple of years the Profit Margin of MPWR has grown nicely.
• With an excellent Operating Margin value of 24.46%, MPWR belongs to the best of the industry, outperforming 84.40% of the companies in the same industry.
• MPWR's Operating Margin has improved in the last couple of years.
• MPWR's Gross Margin of 55.32% is fine compared to the rest of the industry. MPWR outperforms 77.06% of its industry peers.

Looking at the Setup

ChartMill incorporates a Setup Rating in its analysis, which measures the extent of consolidation in a stock over recent days and weeks. This rating, ranging from 0 to 10, is updated daily and takes into account multiple short-term technical indicators. The current setup rating for MPWR is 7:

MPWR has a bad technical rating, but it does show a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is very little resistance above the current price. There is a support zone below the current price at 480.25, a Stop Loss order could be placed below this zone.

Our Strong Growth screener lists more Strong Growth stocks and is updated daily.

For an up to date full fundamental analysis you can check the fundamental report of MPWR

Our latest full technical report of MPWR contains the most current technical analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.