Is It Too Late to Consider Monolithic Power Systems After Its 59% 2025 Rally?

• If you are wondering whether Monolithic Power Systems is still worth buying after its massive run, or if the best days are already priced in, you are not alone.
• The stock is trading around $946.51, down a modest 1.7% over the last week and 1.2% over the last month, but still up an impressive 59.3% year to date and 56.9% over the past year, with multi year gains above 160%.
• Recent enthusiasm has been driven by Monolithic Power Systems' expanding role in power management solutions for data centers and AI infrastructure, alongside continued traction in automotive and industrial applications. Together, these themes have reinforced the market narrative that MPWR is a key picks and shovels provider for long term secular growth in high performance computing and electrification.
• Despite that momentum, the stock only scores a 3/6 valuation check score, suggesting it screens as undervalued on some metrics but not all. Next, we will break down what different valuation approaches say about MPWR today and then circle back to a more powerful way to think about its true worth by the end of this article.

Monolithic Power Systems delivered 56.9% returns over the last year. See how this stacks up to the rest of the Semiconductor industry.

Approach 1: Monolithic Power Systems Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth by projecting the cash it can generate in the future and discounting those cash flows back to today in dollar terms.

For Monolithic Power Systems, the latest twelve month Free Cash Flow stands at about $754 million. Analysts expect this to rise steadily, with Simply Wall St extrapolating those forecasts so that projected Free Cash Flow reaches roughly $1.67 billion by 2035. The 2 Stage Free Cash Flow to Equity model discounts each of these yearly cash flows back to the present and adds a terminal value to capture cash flows beyond the forecast window.

Based on these inputs, the DCF model estimates an intrinsic value of about $342 per share. This implies the stock is roughly 176.5% above its modeled fair value at current prices. In other words, the cash flow outlook does not fully align with the market price if these projections prove accurate.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Monolithic Power Systems may be overvalued by 176.5%. Discover 907 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Monolithic Power Systems.

Approach 2: Monolithic Power Systems Price vs Earnings

For profitable, established companies like Monolithic Power Systems, the price to earnings ratio is a practical way to gauge how much investors are willing to pay today for each dollar of current earnings. It ties the valuation directly to the bottom line, which makes it easier to compare across time and against other businesses.

In general, faster earnings growth and lower perceived risk justify a higher, or premium, PE ratio, while slower growth or higher uncertainty usually call for a discount. MPWR currently trades on about 23.9x earnings. That is below the broader Semiconductor industry average of roughly 37.0x and also beneath a peer group average of around 36.4x, which at first glance suggests the stock is not priced as aggressively as many of its high growth chip peers.

Simply Wall St goes a step further with its Fair Ratio, which estimates what a reasonable PE should be for MPWR given its specific mix of earnings growth, margins, industry, market cap and risk profile. For Monolithic Power Systems, that Fair Ratio is about 23.6x, only slightly below the current 23.9x. Because that gap is very small, the stock screens as broadly in line with its fundamentals on a PE basis.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Monolithic Power Systems Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple tool on Simply Wall St’s Community page that lets you turn your view of a company into a clear story backed by numbers. It links what you believe about Monolithic Power Systems’ future markets, margins and risks to a financial forecast and a Fair Value estimate. This can be compared against today’s share price to help inform whether to buy, hold or sell. The tool updates dynamically as new news or earnings arrive. One investor might build a bullish MPWR Narrative around accelerating AI data center demand and assign a Fair Value near the upper end of recent targets around $1,300. Another investor might take a more cautious view focused on margin pressure and tougher competition and land closer to the low end near $1,025. Both can see exactly how their assumptions drive those values and adjust their decisions as the story evolves.

Do you think there's more to the story for Monolithic Power Systems? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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