Power Integrations (POWI) has capped FY 2025 with Q4 revenue of US$103.2 million and basic EPS of US$0.24, setting a clear marker for how the year wrapped up. The company has seen quarterly revenue move between US$103.2 million and US$118.9 million over the last four quarters, with basic EPS ranging from a small loss of US$0.02 in Q3 2025 to US$0.24 in Q4. Trailing 12 month revenue stood at US$443.5 million and basic EPS at US$0.39. With trailing net profit margins sitting below last year’s level and growth forecasts pointing higher, this earnings print puts the focus squarely on how sustainably the company can rebuild profitability.

With the latest numbers on the table, the next step is to see how this mix of softer recent margins and stronger growth forecasts lines up against the prevailing narratives around Power Integrations and its future earnings path.

Margins Narrow To 5% Over The Year

• Over the last 12 months, Power Integrations earned US$22.1 million on US$443.5 million of revenue, which works out to a 5% net margin compared with 7.7% a year earlier.
• What stands out for a bearish narrative is that this thinner 5% margin sits alongside trailing 12 month basic EPS of US$0.39, which leaves less room to absorb any bumps. Yet the last quarter of FY 2025 still produced US$13.3 million of net income and US$0.24 EPS, suggesting recent profitability is concentrated rather than broadly consistent across the year.
  • Bears point to the five year earnings trend, which shows about 30.6% yearly earnings decline, and the step down in margin from 7.7% to 5% fits that concern about earnings power not fully keeping up with revenue.
  • At the same time, the latest quarter’s US$103.2 million of revenue and positive net income contrast with the loss of US$1.4 million in Q3 2025 on higher revenue of US$118.9 million, so the pressure on margins has not moved in a straight line.

High Growth Forecasts Versus Weak Five Year Trend

• Forecasts call for earnings to grow about 52.5% per year with revenue expected to grow around 11.1% per year, while historically earnings declined roughly 30.6% per year over the past five years.
• What is interesting for a more bullish angle is that analysts are effectively saying the earnings path over the next few years could look very different to the last five, even though trailing 12 month EPS is just US$0.39 and net income is US$22.1 million, which are still well below where a strong multi year growth story might usually start.
  • Bulls like the idea that forecast revenue growth of about 11.1% per year is slightly ahead of the referenced US market forecast of 10.2%, which frames Power Integrations as a potential outgrower if the forecasts play out against that weaker history.
  • However, the fact that Q3 2025 slipped into a small loss despite US$118.9 million of revenue shows that cost control and margin stability need to do some work before those high earnings growth forecasts look fully backed by recent execution.

Bulls who think this earnings reset is the start of a stronger phase may want to see how that story is laid out in full and how it deals with the gap between the weak five year trend and the upbeat forecasts. 📊 Read the full Power Integrations Consensus Narrative.

Rich Valuation With Thin Dividend Cover

• The shares trade on a P/E of about 118.6x versus roughly 40.6x for the wider US semiconductor industry and around 46.1x for peers, while the current price of US$47.34 also sits above an indicated DCF fair value of US$43.48 and the dividend yield of 1.77% is described as not well covered by earnings.
• Critics highlight that when you line up a 5% trailing net margin and US$0.39 of trailing 12 month EPS against a P/E close to three times the industry average, plus a dividend that is not well backed by those earnings and recent insider selling over the last three months, the bearish worry is that a lot of the forecast 52.5% yearly earnings growth is already reflected in the price.
  • The premium over the US$43.48 DCF fair value is one sign that the market is paying up relative to a cash flow based estimate, which can matter if the company delivers something closer to its 5% margin rather than the much stronger profitability implied by forecasts.
  • Because the 1.77% yield is not well covered, investors who mainly care about dividend income are relying on that 52.5% forecast earnings growth to improve coverage rather than on currently robust cash earnings, which ties their outcome closely to those projections.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Power Integrations's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Power Integrations pairs a thinner 5% net margin and uneven quarterly profitability with a rich 118.6x P/E and a dividend that is not well covered.

If that mix of high valuation and fragile earnings coverage feels uncomfortable, you may want to check out 53 high quality undervalued stocks that combine stronger fundamentals with more grounded pricing today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.