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1. Company Snapshot

1.a. Company Description

Power 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.

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1.b. Last Insights on POWI

Power Integrations' recent performance was negatively impacted by a decline in earnings, with Q3 2025 earnings per share (EPS) of $0.36, missing the year-ago figure of $0.40. The company's financials were also affected by a transition in CFO leadership, with Sandeep Nayyar leaving in October. However, the appointment of Nancy Erba as CFO and Julie Currie as Chief People and Transformation Officer may bring fresh perspectives. Additionally, the company's PowiGaN technology for next-generation AI data centers and collaboration with Nvidia may drive future growth.

1.c. Company Highlights

2. Dissecting the Earnings Report: A Mixed Bag

The company's third-quarter financial performance was a mixed bag, with revenues coming in at $119 million, up 3% sequentially, and non-GAAP earnings per diluted share at $0.36, beating estimates of $0.34. The non-GAAP gross margin was not explicitly stated, but the company guided for a non-GAAP gross margin for the fourth quarter to be between 53.5% and 54%. The company's operating expenses were $47.4 million, in line with guidance, with higher legal expenses being the main driver of the sequential increase.

Publication Date: Nov -08

📋 Highlights
  • Q4 Revenue Guidance:: Projected revenue of $100M–$105M, with consumer and industrial segments down due to inventory burn and seasonality.
  • Free Cash Flow Performance:: Generated $30M in Q3, on track for >$80M in 2024, with improved margins expected as revenues recover.
  • High-Power Gate Driver Growth:: Revenue up >30% YTD, with major design win at German EV manufacturer for heavy vehicle drive systems.
  • Non-GAAP Earnings:: Q3 EPS of $0.36 (2% tax rate), driven by $119M sequential revenue growth from industrial and automotive traction.

Segment Performance

The industrial segment was a bright spot, with revenues up high single digits, driven by strength in high-voltage DC transmission and growth in metering and automotive. As Jen Lloyd noted, "Our high-power gate driver business... continues to gain momentum with revenues up more than 30% year-to-date." However, the consumer category was weak, with softness in appliances due to tariffs and stagnant home sales in the U.S. and China's weak housing market.

Outlook and Guidance

The company expects fourth-quarter revenues to be between $100 million and $105 million, with significantly lower consumer revenues and somewhat lower industrial revenues. However, they expect the consumer business to get back to growth in 2026, with moderate growth in appliances. The company's guidance for non-GAAP gross margin in Q4 is between 53.5% and 54%. Analysts estimate next year's revenue growth at 7.6%.

Valuation and Metrics

With a P/E Ratio of 59.14 and an EV/EBITDA of 43.75, the company's valuation appears to be stretched. However, the company's ROIC is 2.91%, and ROE is 4.57%, indicating some return on capital. The Free Cash Flow Yield is 4.2%, which is a positive. The market seems to be pricing in a recovery, and the company's focus on data center, automotive, and high-power markets could be a growth driver.

Growth Drivers

The company is focusing on high-voltage GaN products in the data center market, which they believe will prevail in auxiliary power supplies and main DC to DC conversion. They have had wins with power supply OEMs and expect to release products in 2027, with meaningful revenue generation expected in 2027. The company's automotive business is also seeing success, particularly in emergency power supply and inverters.

3. NewsRoom

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Power Integrations Bolsters Leadership Team with Addition of Julie Currie as Chief People and Transformation Officer

Nov -24

Source: businesswire.com

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Power Integrations Names Nancy Erba as Chief Financial Officer

Nov -18

Source: businesswire.com

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5 Tech And Consumer Stocks At Risk Of Steep Declines

Nov -12

Source: seekingalpha.com

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Power Integrations, Inc. (POWI) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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Power Integrations (POWI) Q3 Earnings and Revenues Top Estimates

Nov -05

Source: zacks.com

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Power Integrations Reports Third-Quarter Financial Results

Nov -05

Source: businesswire.com

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Teacher Retirement System of Texas Sells 2,498 Shares of Power Integrations, Inc. $POWI

Nov -05

Source: defenseworld.net

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Power Integrations to Release Third-Quarter Financial Results on November 5

Oct -21

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (14.00%)

6. Segments

Integrated Circuits and Related Components

Expected Growth: 14%

Power Integrations' 14% growth in Integrated Circuits and Related Components is driven by increasing demand for energy-efficient solutions, rising adoption of IoT and 5G technologies, and growing need for high-power density and compact designs in industries such as industrial, automotive, and consumer electronics.

7. Detailed Products

InnoSwitch

A family of high-voltage, high-current, and high-power ICs that integrate a primary switch, a secondary switch, and a controller in a single package.

LinkSwitch

A family of ICs that integrate a high-voltage power switch, a controller, and a high-voltage startup circuit in a single package.

TinySwitch

A family of ICs that integrate a high-voltage power switch, a controller, and a high-voltage startup circuit in a single package.

CapZero

A family of X-capacitor discharge ICs that provide a safe and reliable way to discharge X-capacitors in AC-DC power supplies.

SENSE

A family of current sense ICs that provide accurate and reliable current sensing in high-voltage applications.

PiMatch

A family of ICs that provide a high-voltage, high-current, and high-power matching network for wireless power transfer applications.

8. Power Integrations, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Power Integrations, Inc. has a moderate threat of substitutes due to the availability of alternative power management products from competitors.

Bargaining Power Of Customers

Power Integrations, Inc. has a low bargaining power of customers due to its strong relationships with major customers and a diverse customer base.

Bargaining Power Of Suppliers

Power Integrations, Inc. has a moderate bargaining power of suppliers due to its dependence on a few key suppliers for certain components.

Threat Of New Entrants

Power Integrations, Inc. has a low threat of new entrants due to the high barriers to entry in the power management industry, including significant research and development investments.

Intensity Of Rivalry

Power Integrations, Inc. operates in a highly competitive industry with intense rivalry among established players, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 1.31%
Debt Cost 3.95%
Equity Weight 98.69%
Equity Cost 9.95%
WACC 9.87%
Leverage 1.33%

11. Quality Control: Power Integrations, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Volatility: 2.0

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Power Integrations

A-Score: 2.8/10

Value: 1.6

Growth: 2.0

Quality: 5.8

Yield: 3.0

Momentum: 1.0

Volatility: 3.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

36.51$

Current Price

36.51$

Potential

-0.00%

Expected Cash-Flows