Can Higher Revenues Benefit Monolithic Power's Q3 Earnings?

Monolithic Power Systems, Inc. MPWR is set to release third-quarter 2025 results on Oct. 30, after the closing bell. It delivered a four-quarter earnings surprise of 1.9%, on average, beating estimates on each occasion. In the last reported quarter, the company pulled off an earnings surprise of 2.2%.

This Kirkland, WA-based company is likely to have recorded higher revenues in the to-be-reported quarter, driven by solid traction in several verticals. Management’s effort to expand and diversify its product portfolio is a positive factor.

Factors at Play for MPWR’s Q3 Earnings

Monolithic Power has been benefiting from healthy traction in the Automotive vertical. Growing usage of IoT and AI applications has been driving demand for Monolithic Power’s analog ICs and sensors. Its deep-rooted partnerships with leading auto suppliers are a tailwind. Apart from automotives, Monolithic Power’s strong focus on innovation has been opening up new opportunities in data centers, building automation, medical and audio verticals. Strong demand for memory and notebook solutions is expected to have driven growth in the Storage and Computing segment. 

During the quarter, the company collaborated with ECARX Holdings Inc. to establish a global supply chain and intelligent industrial ecosystem spanning system integration, platform adaptation and delivery. Per the agreement, both companies will work in unison in the automotive and embodied intelligence sectors to reduce development cycles and accelerate time-to-market for customers. Leveraging its global research and development, supply and engineering support systems, the partnership further aims to deploy ECARX's intelligent automotive and embodied intelligence solutions in industrial automation, telecommunications, cloud computing, automotive intelligence and consumer electronics.

Monolithic Power has been actively investing in cutting-edge technology advancements, venturing into new growth markets and diversifying portfolio offerings. The company is also actively working to enhance resiliency across its global supply chain. Its local manufacturing for local customers approach and augmenting manufacturing footprint worldwide has reduced exposure to tariffs and other geopolitical and macroeconomic volatility. These factors are expected to have had a favorable impact on the third-quarter earnings.

For the September quarter, the Zacks Consensus Estimate for revenues is pegged at $721 million, indicating an increase from $620 million reported in the year-ago quarter. The consensus estimate for adjusted earnings per share is pegged at $4.62, implying growth from $4.06 reported in the prior-year quarter.

Earnings Whispers

Our proven model predicts an earnings beat for Monolithic Power for the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is perfectly the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.77% with the former pegged at $4.66 per share and the latter at $4.62. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Monolithic Power carries a Zacks Rank #2.

Other Stocks to Consider

Here are some companies you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this season:

Advanced Micro Devices, Inc. AMD is set to release quarterly numbers on Nov. 4. It has an Earnings ESP of +0.18% and carries a Zacks Rank #3. 

The Earnings ESP for Fortinet, Inc. FTNT is +4.43% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov. 5.

The Earnings ESP for Qualcomm Incorporated QCOM is +1.43% and it carries a Zacks Rank of 3. The company is scheduled to report quarterly numbers on Nov. 5.

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This article originally published on Zacks Investment Research (zacks.com).

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