Monolithic Power Systems Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Just one quarter after thoroughly disappointing analysts, shares of Monolithic Power Systems (Nasdaq: MPWR  ) surged as much as 12% on better-than-expected earnings.  

So what: Profit checked in $0.18 per share on a Non-GAAP basis, $0.04 better than the consensus estimate, according to Yahoo! Finance. Management also announced a $20 million increase in its active stock repurchase program.

Now what: Buybacks have had the desired effect. Diluted shares outstanding dipped to 36.7 million in Q4, from 37.4 million the prior-year quarter, adding needed juice to the bottom line. Future repurchases will be paid from Monolithic’s war chest, which included $177 million in cash and short-term investments as of Dec. 31.

That’s the good news. The bad is that Monolithic Power has experienced a massive dropoff in revenue growth, which hasn’t yet tarnished direct competitors Analog Devices (NYSE: ADI  ) and Texas Instruments (NYSE: TXN  ) . Revenue growth will have to return for investors to realize healthy returns from here.

Interested in more info on Monolithic Power Systems? Add it to your watchlist. You can also try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn’t own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Texas Instruments and is also on Twitter as @TheMotleyFool. Its disclosure policy is at least 10% better than other disclosure policies.


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