Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Monolithic Power Systems, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 21.1% to 16.5% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 42, DPO 39, DIO 179). At a 9.3% WACC with mid-year discounting, the terminal value (91% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 30.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $852.11 per share, suggesting MPWR is overvalued by 21.3% at the current price of $1082.26.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 798 | 935 | 1,105 | 1,287 | 1,500 | 1,537 |
| (−) Net Interest | 68 | 79 | 94 | 109 | 127 | 130 |
| (+) D&A | 106 | 124 | 155 | 194 | 224 | 229 |
| EBITDA | 971 | 1,137 | 1,353 | 1,590 | 1,851 | 1,897 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 183 | 215 | 254 | 296 | 344 | — |
| (−) ΔWC | 212 | 164 | 204 | 218 | 254 | — |
| Free Cash Flow (FCF) | 576 | 759 | 896 | 1,076 | 1,252 | — |
| Peers' EBITDA Multiple | 30.1x | |||||
| Terminal Value | 56,999 | |||||
| WACC / Discount Rate | 9.31% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 551 | 664 | 717 | 788 | 839 | 36,531 |
| Enterprise Value | 40,091 | |||||
| Projection Period | 3,560 | 8.9% | ||||
| Terminal Value | 36,531 | 91.1% | ||||
| (−) Current Net Debt | (1,075) | |||||
| Equity Value | 41,166 | |||||
| (÷) Outstanding Shares | 48M | |||||
| Fair Price | $852 | -21.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 26.0x | 28.0x | 30.0x | 32.0x | 34.0x |
|---|---|---|---|---|---|
| 7.3% | $819 | $874 | $929 | $984 | $1039 |
| 8.3% | $784 | $837 | $890 | $942 | $995 |
| 9.3% | $751 | $802 | $852 | $902 | $953 |
| 10.3% | $720 | $769 | $817 | $865 | $913 |
| 11.3% | $691 | $737 | $783 | $829 | $875 |
Current price: $1082.26. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.