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Monolithic Power Systems, Inc. (MPWR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Monolithic Power Systems, Inc. (MPWR)

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Intrinsic Value (DCF)

Current$1,009.54
→
Intrinsic$478.70
-53%
$330.36$478.70$760.14
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $330 → Bull $760. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $760).
Discount ↓Growth →21%23%25%27%
8%$586$632$681$733
10%$414$445$479$514
12%$319$342$367$393
14%$259$277$297$317

Bull Case

  • Bull case ($760) with 30% growth, 9% discount rate

Bear Case

  • Bear case ($330) implies 67% downside at 20% growth, 12% discount
  • Trading 53% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($760) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$802.87M
Year 2$1.00B
Year 3$1.25B
Year 4$1.57B
Year 5$1.96B
Terminal$28.84B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$642.29MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is MPWR stock undervalued or overvalued?
🔴 OVERVALUED

MPWR trades at $1009.54 vs. our DCF-derived intrinsic value of $398.93, implying -60% downside. Using a 10.0% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($594.04) suggests limited upside.

What is MPWR's intrinsic value?

Using a 5-year DCF model: Base FCF of $642M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-679M net debt and dividing by 0.05B shares: Bear $266.44 | Base $398.93 | Bull $594.04. Current price $1009.54 implies -60% to base case.

How is MPWR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($18.80B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.