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Power Integrations (POWI)
NASDAQ:POWI
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Power Integrations
(NASDAQ:POWI)
Rating:55Neutral
Price Target:―
Positive Factors
Earnings
Stable bookings and healthy inventory with EPS upside on margin and buybacks support the Buy rating for Power Integrations.
Revenue Growth
Automotive momentum is strong with the company's first EV power train design win using its GaN device, indicating potential for revenue growth.
Share Repurchases
Accelerated share repurchases supported by improving cash generation and a strong balance sheet are expected to positively impact future earnings.
Negative Factors
Consumer Demand
Consumer was down the most on softness in major appliances, with growth expected to moderate as the soft housing market weighs on demand.
Gross Margin
Gross margin is expected to decline due to less favorable end market mix and higher input costs.
Industrial Segment
Industrial segment experienced a greater than seasonal decline in tools and home automation, which negatively impacted performance.
Power Integrations (POWI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.97B
Dividend Yield1.55%
Average Volume (3M)591.21K
Price to Earnings (P/E)81.3
Beta (1Y)1.58
Revenue Growth-5.75%
EPS Growth-41.75%
CountryUS
Employees865
SectorTechnology
Sector Strength76
IndustrySemiconductors
Share Statistics
EPS (TTM)0.31
Shares Outstanding56,290,320
10 Day Avg. Volume660,945
30 Day Avg. Volume591,205
Financial Highlights & Ratios
PEG Ratio-6.59
Price to Book (P/B)3.87
Price to Sales (P/S)0.00
P/FCF Ratio45.36
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$71.00Price Target Upside38.70% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Power Integrations Business Overview & Revenue Model
Company DescriptionPower Integrations, Inc. designs, develops, manufactures, and markets analog and mixed-signal integrated circuits (ICs), and other electronic components and circuitry used in high-voltage power conversion worldwide. The company provides a range of alternating current to direct current power conversion products that address power supply ranging from less than one watt of output to approximately 500 watts of output for mobile-device chargers, consumer appliances, utility meters, LCD monitors, main and standby power supplies for desktop computers and TVs, LED lighting, and various other consumer and industrial applications, as well as power conversion in high-power applications comprising industrial motors, solar and wind-power systems, electric vehicles, and high-voltage DC transmission systems. It also offers high-voltage diodes; high-voltage gate-driver products used to operate high-voltage switches, such as insulated-gate bipolar transistors and silicon-carbide MOSFETs under the SCALE and SCALE-2 product-family names; and SCALE-iDriver for use in powertrain and charging applications for electric vehicles. In addition, the company provides motor-driver ICs for use in refrigerator compressors, ceiling fans, and air purifiers, as well as pumps, fans, and blowers used in consumer appliances, such as dishwashers and laundry machines. It serves communications, computer, consumer, and industrial markets. The company sells its products to original equipment manufacturers and merchant power supply manufacturers through direct sales force, as well as a network of independent sales representatives and distributors. Power Integrations, Inc. was incorporated in 1988 and is headquartered in San Jose, California.
How the Company Makes MoneyPower Integrations generates revenue primarily through the sale of its proprietary integrated circuits and related components, which are essential in various power conversion applications. The company's key revenue streams include the consumer electronics sector, where its products are used in devices such as smartphones, appliances, and LED lighting. Additionally, the industrial sector contributes significantly to its earnings, with applications in motor controls and power supplies. Power Integrations also benefits from strategic partnerships with electronics manufacturers and technology firms that integrate its solutions into their products, thereby expanding its market reach and driving sales growth. Innovative product development and a strong patent portfolio further reinforce its competitive edge and financial performance.
Power Integrations Financial Statement Overview
Summary
Power Integrations exhibits a strong balance sheet with no debt and high equity levels, indicating financial health. However, the decline in revenue and profitability poses challenges. Cash flow remains solid, but negative free cash flow growth could limit expansion opportunities.Income Statement
The income statement shows a decline in total revenue from $651 million in 2022 to $419 million in 2024, indicating a negative revenue growth trend. The gross profit margin for 2024 is approximately 53.6%, which is relatively healthy for the industry. However, the net profit margin dropped from 26.3% in 2022 to 7.7% in 2024, reflecting reduced profitability. EBIT and EBITDA margins also decreased significantly, suggesting operational challenges and reduced earnings efficiency.70
Positive
Balance Sheet
The balance sheet remains strong with a debt-free position in 2024, enhancing financial stability. The equity ratio is high at approximately 90.5%, indicating a solid capital structure with low leverage. Return on equity has declined from 22.6% in 2022 to 4.3% in 2024, highlighting a decrease in shareholder returns. Overall, the company's balance sheet demonstrates financial resilience despite pressures on profitability.80
Positive
Cash Flow
Cash flow metrics indicate a mixed performance. Operating cash flow increased from $65.8 million in 2023 to $81.2 million in 2024, showing improved cash generation from operations. Free cash flow to net income ratio is robust, suggesting effective cash conversion. However, free cash flow growth has been negative when compared to the previous periods, which could impact future investment capabilities. The operating cash flow to net income ratio is strong, indicating efficient cash management despite declining net income.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 418.97M | 444.54M | 651.14M | 703.28M | 488.32M | Gross Profit |
| 224.75M | 228.96M | 366.91M | 360.64M | 243.59M | EBIT |
| 17.93M | 35.06M | 180.41M | 175.06M | 70.49M | EBITDA |
| 17.93M | 72.44M | 217.76M | 210.01M | 98.59M | Net Income Common Stockholders |
| 32.23M | 55.73M | 170.85M | 164.41M | 71.18M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 300.00M | 311.57M | 353.81M | 530.35M | 449.19M | Total Assets |
| 828.83M | 819.87M | 840.10M | 1.01B | 903.34M | Total Debt |
| 0.00 | 9.98M | 8.73M | 11.42M | 10.03M | Net Debt |
| -50.97M | -53.95M | -96.65M | -146.70M | -248.85M | Total Liabilities |
| 79.05M | 67.63M | 84.88M | 102.45M | 92.93M | Stockholders Equity |
| 749.77M | 752.24M | 755.22M | 912.03M | 810.41M |
| Cash Flow | Free Cash Flow | |||
| 63.90M | 44.88M | 176.13M | 183.60M | 55.04M | Operating Cash Flow |
| 81.18M | 65.76M | 215.34M | 230.87M | 125.64M | Investing Cash Flow |
| -25.92M | -14.15M | 78.34M | -232.80M | -28.27M | Financing Cash Flow |
| -68.22M | -93.05M | -346.42M | -98.83M | -17.19M |
Power Integrations Technical Analysis
Negative
51.19
Price Trends
51.06
Positive
56.09
Negative
59.37
Negative
Market Momentum
0.86
Negative
48.06
Neutral
20.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For POWI, the sentiment is Negative. The current price of 51.19 is below the 20-day moving average (MA) of 52.04, above the 50-day MA of 51.06, and below the 200-day MA of 59.37, indicating a neutral trend. The MACD of 0.86 indicates Negative momentum. The RSI at 48.06 is Neutral, neither overbought nor oversold. The STOCH value of 20.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for POWI.
Power Integrations Risk Analysis
Power Integrations disclosed 26 risk factors in its most recent earnings report. Power Integrations reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Warranty claims, product liability claims and product recalls could harm our business, results of operations and financial condition. Q4, 2024
Power Integrations Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Neutral | $1.48B | 16.84 | 9.79% | 3.32% | 0.61% | 80.97% | |
66 Neutral | $4.19B | ― | -14.77% | ― | 2.16% | -55.38% | |
64 Neutral | $1.76B | 92.01 | 2.29% | 2.44% | -6.17% | ― | |
60 Neutral | $11.56B | 10.24 | -7.04% | 2.94% | 7.46% | -10.54% | |
58 Neutral | $4.88B | ― | -12.78% | ― | 65.85% | 7.92% | |
55 Neutral | $2.97B | 81.31 | 5.03% | 1.55% | -5.75% | -41.75% | |
49 Neutral | $3.41B | ― | -137.83% | ― | 4.66% | 84.78% |
* Technology Sector Average
Performance Comparison
POWI
Power Integrations
51.19
-24.10
-32.01%
HIMX
Himax Technologies
8.23
2.00
32.10%
KLIC
Kulicke & Soffa
32.26
-13.19
-29.02%
SMTC
Semtech
37.79
-1.59
-4.04%
SLAB
Silicon Laboratories
122.75
-1.47
-1.18%
SITM
SiTime Corporation
201.12
81.19
67.70%
Power Integrations Earnings Call Summary
Earnings Call Date:May 12, 2025
(Q1-2025)
| % Change Since: -13.25%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The overall sentiment of the call is positive, with significant year-over-year revenue growth and strong performance in the Consumer and Industrial segments. The company is expanding its presence in the automotive market and maintaining a strong cash flow position. However, there are challenges related to inventory levels and potential volatility in the Consumer segment due to trade policies.Q1-2025 Updates
Positive Updates
Year-Over-Year Revenue Growth
Revenues for the first quarter were $106 million, up 15% year-over-year. All four end markets showed growth, with Consumer and Computer categories growing by more than 20% each.
Strong Performance in Consumer Segment
The Consumer segment saw significant growth in TVs and game consoles, as well as appliances and air conditioning, benefiting from new design wins and market conditions.
Industrial Segment Growth
Industrial revenues grew 7% year-over-year with expectations to be the fastest-growing market this year, driven by high-power design wins in high-voltage DC transmission, renewables, and locomotives.
Automotive Market Expansion
Expansion into the automotive market with more than two dozen designs on the road in China, and new design wins in Japan and Europe. The first GaN design in automotive was secured with a U.S. EV customer.
Positive Cash Flow and Share Buybacks
Cash flow from operations was $26 million for the quarter. The company repurchased $23 million worth of shares and announced a new $50 million authorization for share buybacks.
Negative Updates
Seasonal Decline in Industrial Revenues
Industrial revenues decreased 3% sequentially due to more pronounced seasonality in tools and home automation and timing of high-volume programs.
Inventory Levels
Inventories on the balance sheet remain elevated at 326 days, with expectations for inventories to start tapering down in the second half of the year.
Consumer Segment Volatility
Anticipated sequential decline in consumer revenues following an unusually strong first quarter, partly due to front-loading of appliance shipments ahead of tariffs.
Company Guidance
During the first quarter earnings call for Power Integrations, Inc., the company reported that their Q1 revenues were $106 million, marking a 15% year-over-year increase. The revenue was in line with guidance, with a gross margin at the upper end of expectations at 55.9% and a non-GAAP EPS of $0.31. The Consumer and Computer categories led growth with over 20% increases each, driven by strong demand in appliances, air conditioning, TVs, and game consoles. Industrial revenues grew 7% year-over-year, bolstered by high-power design wins in high-voltage DC transmission, renewables, and locomotives. The company anticipates Q2 revenues of $115 million, plus or minus $5 million, estimating an 8% year-over-year and 9% sequential increase. They noted stable bookings, normal distribution inventory levels, and a healthy cash flow of $26 million. The company also highlighted ongoing share repurchase activities, with $48 million spent year-to-date, and expects Industrial to be the fastest-growing market in 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.