Monolithic Power Systems DCF Stock Analysis.

Here’s my assumptions:

Risk Free Rate (10 Years Interest Rate Swap): 4.225%

Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.33%

Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 1%

Weighted average cost of capital assumption for the next 2 years: 13.5%

Weighted average cost of capital assumption from 2 years from now until: 10%

Weighted average cost of capital assumption for the perpetual growth calculation: 8% (that’s because I expect the company to rely more on debt and less on equity in the future)

Historical Data

Revenue growth in the last 10 years (CAGR): 20.82%

Earnings growth in the last 10 years (CAGR): 48.97%

Unlevered Free Cash Flow growth in the last 10 years (CAGR): 27.64%

Future Assumptions

End of Year FCF growth: 20%

Growth until end of 2026: 40%

Growth until end of 2034: 20%

Perpetual growth: 3.2%

(I expect it to grow in cash flows more than what the company did in the past because I expect it to grow its margins as it contues to grow in revenue)

Net Debt: -1.251B

Outstanding Stock Options Present Value Assumption: $0B

Restricted Stock Units Present Value Assumption: $1.640B

Stock Valuation based on these assumptions: $701

Last update 12/28/2025

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All the content in this newsletter should be taken as informational content only. THIS IS NOT FINANCIAL ADVICE! Do your own Due Diligence before investing or contact a professional financial advisor.

I don’t have a position in Monolithic Power Systems (MPWR) and I don’t plan to add a position in the coming days.