In This Article:
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of MPWR, it is a financially-sound company with an impressive history and a excellent future outlook. Below, I’ve touched on some key aspects you should know on a high level. If you’re interested in understanding beyond my high-level commentary, take a look at the report on Monolithic Power Systems here.
Flawless balance sheet with high growth potential
Investors in search for stocks with room to flourish should look no further than MPWR, with its expected earnings growth of 21% which is expected to flow into an impressive return on equity of 30% over the next couple of years. MPWR delivered a bottom-line expansion of 29% in the prior year, with its most recent earnings level surpassing its average level over the last five years. In addition to beating its historical values, MPWR also outperformed its industry, which delivered a growth of 7.1%. This is an optimistic signal for the future.
MPWR’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This indicates that MPWR has sufficient cash flows and proper cash management in place, which is a crucial insight into the health of the company. MPWR currently has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is rather impressive for a US$4.9b market cap company. MPWR has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
Next Steps:
For Monolithic Power Systems, there are three fundamental factors you should look at:
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Valuation: What is MPWR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MPWR is currently mispriced by the market.
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Dividend Income vs Capital Gains: Does MPWR return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from MPWR as an investment.
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Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of MPWR? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.