Stock Analysis on Net

Monolithic Power Systems Inc. (NASDAQ:MPWR)

Capital Asset Pricing Model (CAPM) 

Microsoft Excel

Rates of Return

Monolithic Power Systems Inc., monthly rates of return

Microsoft Excel
Monolithic Power Systems Inc. (MPWR) Standard & Poor’s 500 (S&P 500)
t Date PriceMPWR,t1 DividendMPWR,t1 RMPWR,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2019 $126.56 2,704.10
1. Feb 28, 2019 $134.11 5.97% 2,784.49 2.97%
2. Mar 31, 2019 $135.49 $0.40 1.33% 2,834.40 1.79%
3. Apr 30, 2019 $155.71 14.92% 2,945.83 3.93%
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2023 $548.72 24.22% 4,567.80 8.92%
59. Dec 31, 2023 $630.78 $1.00 15.14% 4,769.83 4.42%
Average (R): 3.45% 1.11%
Standard deviation: 11.17% 5.31%
Monolithic Power Systems Inc. (MPWR) Standard & Poor’s 500 (S&P 500)
t Date PriceMPWR,t1 DividendMPWR,t1 RMPWR,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2019 $126.56 2,704.10
1. Feb 28, 2019 $134.11 5.97% 2,784.49 2.97%
2. Mar 31, 2019 $135.49 $0.40 1.33% 2,834.40 1.79%
3. Apr 30, 2019 $155.71 14.92% 2,945.83 3.93%
4. May 31, 2019 $116.45 -25.21% 2,752.06 -6.58%
5. Jun 30, 2019 $135.78 $0.40 16.94% 2,941.76 6.89%
6. Jul 31, 2019 $148.16 9.12% 2,980.38 1.31%
7. Aug 31, 2019 $150.56 1.62% 2,926.46 -1.81%
8. Sep 30, 2019 $155.63 $0.40 3.63% 2,976.74 1.72%
9. Oct 31, 2019 $149.92 -3.67% 3,037.56 2.04%
10. Nov 30, 2019 $160.68 7.18% 3,140.98 3.40%
11. Dec 31, 2019 $178.02 $0.40 11.04% 3,230.78 2.86%
12. Jan 31, 2020 $171.17 -3.85% 3,225.52 -0.16%
13. Feb 29, 2020 $158.64 -7.32% 2,954.22 -8.41%
14. Mar 31, 2020 $167.46 $0.50 5.87% 2,584.59 -12.51%
15. Apr 30, 2020 $199.91 19.38% 2,912.43 12.68%
16. May 31, 2020 $209.75 4.92% 3,044.31 4.53%
17. Jun 30, 2020 $237.00 $0.50 13.23% 3,100.29 1.84%
18. Jul 31, 2020 $265.01 11.82% 3,271.12 5.51%
19. Aug 31, 2020 $267.13 0.80% 3,500.31 7.01%
20. Sep 30, 2020 $279.61 $0.50 4.86% 3,363.00 -3.92%
21. Oct 31, 2020 $319.60 14.30% 3,269.96 -2.77%
22. Nov 30, 2020 $319.96 0.11% 3,621.63 10.75%
23. Dec 31, 2020 $366.23 $0.50 14.62% 3,756.07 3.71%
24. Jan 31, 2021 $355.29 -2.99% 3,714.24 -1.11%
25. Feb 28, 2021 $374.52 5.41% 3,811.15 2.61%
26. Mar 31, 2021 $353.21 $0.60 -5.53% 3,972.89 4.24%
27. Apr 30, 2021 $361.38 2.31% 4,181.17 5.24%
28. May 31, 2021 $343.12 -5.05% 4,204.11 0.55%
29. Jun 30, 2021 $373.45 $0.60 9.01% 4,297.50 2.22%
30. Jul 31, 2021 $449.26 20.30% 4,395.26 2.27%
31. Aug 31, 2021 $494.93 10.17% 4,522.68 2.90%
32. Sep 30, 2021 $484.68 $0.60 -1.95% 4,307.54 -4.76%
33. Oct 31, 2021 $525.46 8.41% 4,605.38 6.91%
34. Nov 30, 2021 $553.46 5.33% 4,567.00 -0.83%
35. Dec 31, 2021 $493.33 $0.60 -10.76% 4,766.18 4.36%
36. Jan 31, 2022 $402.93 -18.32% 4,515.55 -5.26%
37. Feb 28, 2022 $458.70 13.84% 4,373.94 -3.14%
38. Mar 31, 2022 $485.68 $0.75 6.05% 4,530.41 3.58%
39. Apr 30, 2022 $392.24 -19.24% 4,131.93 -8.80%
40. May 31, 2022 $450.39 14.83% 4,132.15 0.01%
41. Jun 30, 2022 $384.04 $0.75 -14.57% 3,785.38 -8.39%
42. Jul 31, 2022 $464.72 21.01% 4,130.29 9.11%
43. Aug 31, 2022 $453.18 -2.48% 3,955.00 -4.24%
44. Sep 30, 2022 $363.40 $0.75 -19.65% 3,585.62 -9.34%
45. Oct 31, 2022 $339.45 -6.59% 3,871.98 7.99%
46. Nov 30, 2022 $381.96 12.52% 4,080.11 5.38%
47. Dec 31, 2022 $353.61 $0.75 -7.23% 3,839.50 -5.90%
48. Jan 31, 2023 $426.56 20.63% 4,076.60 6.18%
49. Feb 28, 2023 $484.29 13.53% 3,970.15 -2.61%
50. Mar 31, 2023 $500.54 $1.00 3.56% 4,109.31 3.51%
51. Apr 30, 2023 $461.97 -7.71% 4,169.48 1.46%
52. May 31, 2023 $489.91 6.05% 4,179.83 0.25%
53. Jun 30, 2023 $540.23 $1.00 10.48% 4,376.86 4.71%
54. Jul 31, 2023 $559.49 3.57% 4,588.96 4.85%
55. Aug 31, 2023 $521.21 -6.84% 4,507.66 -1.77%
56. Sep 30, 2023 $462.00 $1.00 -11.17% 4,288.05 -4.87%
57. Oct 31, 2023 $441.74 -4.39% 4,193.80 -2.20%
58. Nov 30, 2023 $548.72 24.22% 4,567.80 8.92%
59. Dec 31, 2023 $630.78 $1.00 15.14% 4,769.83 4.42%
Average (R): 3.45% 1.11%
Standard deviation: 11.17% 5.31%

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1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of MPWR during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t


Variance and Covariance

Monolithic Power Systems Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RMPWR,t RS&P 500,t (RMPWR,tRMPWR)2 (RS&P 500,tRS&P 500)2 (RMPWR,tRMPWR)×(RS&P 500,tRS&P 500)
1. Feb 28, 2019 5.97% 2.97% 6.33 3.49 4.70
2. Mar 31, 2019 1.33% 1.79% 4.50 0.47 -1.46
3. Apr 30, 2019 14.92% 3.93% 131.65 7.98 32.42
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2023 24.22% 8.92% 431.32 61.03 162.24
59. Dec 31, 2023 15.14% 4.42% 136.60 11.00 38.77
Total (Σ): 7,239.66 1,634.30 1,993.28
t Date RMPWR,t RS&P 500,t (RMPWR,tRMPWR)2 (RS&P 500,tRS&P 500)2 (RMPWR,tRMPWR)×(RS&P 500,tRS&P 500)
1. Feb 28, 2019 5.97% 2.97% 6.33 3.49 4.70
2. Mar 31, 2019 1.33% 1.79% 4.50 0.47 -1.46
3. Apr 30, 2019 14.92% 3.93% 131.65 7.98 32.42
4. May 31, 2019 -25.21% -6.58% 821.57 59.04 220.24
5. Jun 30, 2019 16.94% 6.89% 182.07 33.49 78.09
6. Jul 31, 2019 9.12% 1.31% 32.13 0.04 1.17
7. Aug 31, 2019 1.62% -1.81% 3.35 8.50 5.33
8. Sep 30, 2019 3.63% 1.72% 0.03 0.37 0.11
9. Oct 31, 2019 -3.67% 2.04% 50.67 0.88 -6.67
10. Nov 30, 2019 7.18% 3.40% 13.90 5.28 8.57
11. Dec 31, 2019 11.04% 2.86% 57.62 3.07 13.31
12. Jan 31, 2020 -3.85% -0.16% 53.25 1.61 9.26
13. Feb 29, 2020 -7.32% -8.41% 115.99 90.57 102.49
14. Mar 31, 2020 5.87% -12.51% 5.88 185.44 -33.03
15. Apr 30, 2020 19.38% 12.68% 253.71 134.06 184.43
16. May 31, 2020 4.92% 4.53% 2.17 11.71 5.04
17. Jun 30, 2020 13.23% 1.84% 95.66 0.54 7.17
18. Jul 31, 2020 11.82% 5.51% 70.04 19.40 36.86
19. Aug 31, 2020 0.80% 7.01% 7.02 34.82 -15.63
20. Sep 30, 2020 4.86% -3.92% 1.99 25.29 -7.09
21. Oct 31, 2020 14.30% -2.77% 117.78 15.00 -42.03
22. Nov 30, 2020 0.11% 10.75% 11.13 93.10 -32.20
23. Dec 31, 2020 14.62% 3.71% 124.72 6.79 29.11
24. Jan 31, 2021 -2.99% -1.11% 41.43 4.93 14.29
25. Feb 28, 2021 5.41% 2.61% 3.85 2.26 2.95
26. Mar 31, 2021 -5.53% 4.24% 80.63 9.85 -28.18
27. Apr 30, 2021 2.31% 5.24% 1.29 17.11 -4.70
28. May 31, 2021 -5.05% 0.55% 72.29 0.31 4.74
29. Jun 30, 2021 9.01% 2.22% 30.97 1.24 6.21
30. Jul 31, 2021 20.30% 2.27% 283.94 1.37 19.70
31. Aug 31, 2021 10.17% 2.90% 45.11 3.22 12.04
32. Sep 30, 2021 -1.95% -4.76% 29.15 34.37 31.65
33. Oct 31, 2021 8.41% 6.91% 24.64 33.74 28.84
34. Nov 30, 2021 5.33% -0.83% 3.53 3.76 -3.64
35. Dec 31, 2021 -10.76% 4.36% 201.80 10.60 -46.25
36. Jan 31, 2022 -18.32% -5.26% 474.11 40.51 138.58
37. Feb 28, 2022 13.84% -3.14% 107.99 17.99 -44.08
38. Mar 31, 2022 6.05% 3.58% 6.74 6.11 6.42
39. Apr 30, 2022 -19.24% -8.80% 514.77 98.04 224.65
40. May 31, 2022 14.83% 0.01% 129.40 1.21 -12.52
41. Jun 30, 2022 -14.57% -8.39% 324.53 90.21 171.10
42. Jul 31, 2022 21.01% 9.11% 308.31 64.09 140.57
43. Aug 31, 2022 -2.48% -4.24% 35.20 28.62 31.74
44. Sep 30, 2022 -19.65% -9.34% 533.39 109.11 241.24
45. Oct 31, 2022 -6.59% 7.99% 100.80 47.34 -69.08
46. Nov 30, 2022 12.52% 5.38% 82.33 18.23 38.74
47. Dec 31, 2022 -7.23% -5.90% 113.96 49.04 74.76
48. Jan 31, 2023 20.63% 6.18% 295.17 25.70 87.10
49. Feb 28, 2023 13.53% -2.61% 101.69 13.82 -37.48
50. Mar 31, 2023 3.56% 3.51% 0.01 5.76 0.27
51. Apr 30, 2023 -7.71% 1.46% 124.44 0.13 -4.00
52. May 31, 2023 6.05% 0.25% 6.75 0.74 -2.23
53. Jun 30, 2023 10.48% 4.71% 49.36 13.02 25.35
54. Jul 31, 2023 3.57% 4.85% 0.01 13.99 0.43
55. Aug 31, 2023 -6.84% -1.77% 105.91 8.28 29.61
56. Sep 30, 2023 -11.17% -4.87% 213.68 35.73 87.38
57. Oct 31, 2023 -4.39% -2.20% 61.38 10.92 25.88
58. Nov 30, 2023 24.22% 8.92% 431.32 61.03 162.24
59. Dec 31, 2023 15.14% 4.42% 136.60 11.00 38.77
Total (Σ): 7,239.66 1,634.30 1,993.28

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VarianceMPWR = Σ(RMPWR,tRMPWR)2 ÷ (59 – 1)
= 7,239.66 ÷ (59 – 1)
= 124.82

VarianceS&P 500 = Σ(RS&P 500,tRS&P 500)2 ÷ (59 – 1)
= 1,634.30 ÷ (59 – 1)
= 28.18

CovarianceMPWR, S&P 500 = Σ(RMPWR,tRMPWR)×(RS&P 500,tRS&P 500) ÷ (59 – 1)
= 1,993.28 ÷ (59 – 1)
= 34.37


Systematic Risk (β) Estimation

Microsoft Excel
VarianceMPWR 124.82
VarianceS&P 500 28.18
CovarianceMPWR, S&P 500 34.37
Correlation coefficientMPWR, S&P 5001 0.58
βMPWR2 1.22
αMPWR3 2.10%

Calculations

1 Correlation coefficientMPWR, S&P 500
= CovarianceMPWR, S&P 500 ÷ (Standard deviationMPWR × Standard deviationS&P 500)
= 34.37 ÷ (11.17% × 5.31%)
= 0.58

2 βMPWR
= CovarianceMPWR, S&P 500 ÷ VarianceS&P 500
= 34.37 ÷ 28.18
= 1.22

3 αMPWR
= AverageMPWR – βMPWR × AverageS&P 500
= 3.45%1.22 × 1.11%
= 2.10%


Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.79%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk (β) of Monolithic Power Systems Inc. common stock βMPWR 1.22
 
Expected rate of return on Monolithic Power Systems Inc. common stock3 E(RMPWR) 15.77%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(RMPWR) = RF + βMPWR [E(RM) – RF]
= 4.79% + 1.22 [13.79%4.79%]
= 15.77%