Power Integrations Earnings Preview

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Investors hope Power Integrations (NAS: POWI) will top analyst estimates once again after beating predictions by 3 cents in the previous quarter. The company will unveil its latest earnings Tuesday. Power Integrations designs, develops, manufactures, and markets proprietary, high-voltage, analog integrated circuits for use in AC-DC and DC-DC power conversion..

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back Power Integrations, with seven of 11 rating it a buy and the remainder rating it a hold. Analysts don't like Power Integrations as much as competitor Volterra Semiconductor overall. Analysts' rating of Power Integrations has stayed constant from three months prior.
  • Revenue forecasts: On average, analysts predict $79.5 million in revenue this quarter. That would represent a decline of 0.5% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.36 per share. Estimates range from $0.33 to $0.40.

What our community says:
CAPS All-Stars are solidly behind the stock with 87.9% awarding it an "outperform" rating. The community at large agrees with the All-Stars with 90.8% granting it a rating of "outperform." Fools are gung-ho about Power Integrations, though the message boards have been quiet lately with only 25 posts in the past 30 days. Power Integrations has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Power Integrations' profit has risen year over year by an average of 64.9%. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 2.8 percentage points in the last quarter. Revenue rose 7.3% while cost of sales rose 13.4% to $40.3 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

47.4%

49.5%

51.7%

52%

Operating Margin

15.2%

15.0%

20.2%

23.6%

Net Margin

12.8%

12.2%

16.7%

19.5%

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At the time this article was published

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