Power Integrations (POWI) AI Stock Analysis

• Market Cap: $3.27B
• Dividend Yield: 1.45%
• Average Volume (3M): 475.58K
• Price to Earnings (P/E): 89.3
• Beta (1Y): 1.60
• Revenue Growth: -5.75%
• EPS Growth: -41.75%
• Country: US
• Employees: 865
• Sector: Technology
• Sector Strength: 91
• Industry: Semiconductors
• EPS (TTM): 0.31
• Shares Outstanding: 56,290,320
• 10 Day Avg. Volume: 352,616
• 30 Day Avg. Volume: 475,576
• PEG Ratio: 6.00
• Price to Book (P/B): 4.24
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 42.33
• Enterprise Value/Market Cap: 0.92
• Enterprise Value/Revenue: 1.79
• Enterprise Value/Gross Profit: 12.72
• Enterprise Value/Ebitda: 15.96
• 1Y Price Target: $71.00
• Price Target Upside: 25.31% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 55 Neutral
• Price Target: ―

Power Integrations faces significant challenges with declining revenue and profitability, despite a robust balance sheet. Technical indicators suggest bearish market trends, and a high P/E ratio points to potential overvaluation. Positive future growth expectations from the earnings call provide some optimism, but inventory management issues and segment-specific declines temper the outlook.

Positive Factors

Automotive Growth

Automotive momentum is strong with the company's first EV power train design win using its GaN device, indicating potential for revenue growth.

Buybacks and Earnings

Accelerated share repurchases supported by improving cash generation and a strong balance sheet are expected to positively impact future earnings.

GaN Adoption

GaN adoption is accelerating, with strong demand across the portfolio, particularly for its new 1700V solution.

Negative Factors

Gross Margin Decline

Gross margin is expected to decline due to less favorable end market mix and higher input costs.

Industrial Segment Decline

Industrial segment experienced a greater than seasonal decline in tools and home automation, which negatively impacted performance.

Power Integrations Business Overview & Revenue Model

Company Description

Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power conversion. Based in San Jose, California, the company specializes in developing and manufacturing cutting-edge integrated circuits (ICs) that are pivotal in efficient energy conversion for a wide array of applications, including consumer electronics, industrial systems, and renewable energy sources. Power Integrations' products are known for enhancing energy efficiency, minimizing electronic waste, and reducing carbon footprints, aligning with global sustainability efforts.

How the Company Makes Money

Power 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 maintains a strong balance sheet with no debt and high equity, indicating solid financial health. However, declining revenue and profitability present significant challenges, as reflected in a reduced net profit margin. Cash flow remains robust, especially in operational cash generation, but negative free cash flow growth could constrain future investments.

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.

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.

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.

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
EBITDA	52.51M	72.44M	217.76M	210.01M	98.59M
Net Income	32.23M	55.73M	170.85M	164.41M	71.18M
Balance Sheet
Total Assets	828.83M	819.87M	840.10M	1.01B	903.34M
Cash, Cash Equivalents and Short-Term Investments	300.00M	311.57M	353.81M	530.35M	449.19M
Total Debt	0.00	9.98M	8.73M	11.42M	10.03M
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

• Technical Analysis Sentiment: Neutral
• Last Price: 56.66
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For POWI, the sentiment is Neutral. The current price of 56.66 is above the 20-day moving average (MA) of 56.56, above the 50-day MA of 54.28, and below the 200-day MA of 58.02, indicating a neutral trend. The MACD of 1.12 indicates Positive momentum. The RSI at 51.74 is Neutral, neither overbought nor oversold. The STOCH value of 52.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for POWI.

Power Integrations Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HIMX	74 Outperform	$1.64B	18.72	9.79%	3.94%	0.61%	80.97%
KLIC	65 Neutral	$1.91B	100.30	2.29%	2.26%	-6.17%	―
SLAB	64 Neutral	$4.56B	―	-14.77%	―	2.16%	-55.38%
Sector *	63 Neutral	$33.80B	5.84	-11.67%	1.84%	5.28%	-18.34%
SMTC	62 Neutral	$4.07B	―	-93.41%	―	13.83%	88.14%
SITM	57 Neutral	$5.26B	―	-12.78%	―	65.85%	7.92%
POWI	55 Neutral	$3.27B	89.33	5.03%	1.45%	-5.75%	-41.75%