Marvell Technology Q3 Earnings: Can MRVL Hit Its $0.17 EPS Target?

in EARNINGS/INVESTING IDEAS by

Marvell Technology Group Ltd. (NASDAQGS:MRVL) is scheduled to report Q3 earnings results on December 3, 2019, at 4:45 PM EST. You can find more information on the conference call here.

The company is expected to report earnings of $0.17/share on revenue of $660 million. The consensus earnings per share (EPS) of $0.17/share is based on a poll of 25 analysts and represents a decline of -48.5% over the same quarter last year when the company reported earnings of $0.33/share.

The revenue forecast of $660 million based on a poll of 22 analysts implies a year-over-year (YoY) decline of -22.4%. Last year the company reported $851.1 million in revenue for the quarter.

Expected to report EPS decline of -$0.16/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $660.00 $851.05 -22.4%
EPS $0.17 $0.33 -48.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 1 quarter. What are your expectations from Marvell Technology for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.15 $0.16 6.7% Beat
Q1, 2020 $0.14 $0.16 14.3% Beat
Q4, 2019 $0.25 $0.25 0.0% Meet
Q3, 2019 $0.32 $0.33 3.1% Beat
Q2, 2019 $0.35 $0.28 -20.0% Missed
Q1, 2019 $0.31 $0.32 3.2% Beat
Q4, 2018 $0.31 $0.32 3.2% Beat
Q3, 2018 $0.33 $0.34 3.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending August 3, 2019, the stock price reacted by increasing by 1.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-29 $23.58 $23.97 1.7% Increase
2019-05-30 $22.02 $22.30 1.3% Increase
2019-03-07 $19.60 $18.68 -4.7% Decline
2018-12-06 $15.50 $15.44 -0.4% Decline

Fundamentals And Technical Analysis

Marvell Technology is currently trading at $25.81/share, down -2.1% for the day. The company is trading at approximately 93% of its 52-week high of $27.64/share. The company’s stock price is up 7.7% since the last earnings report and down -2.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 52.62 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of -41.8x and a forward P/E multiple of 37.7x.

Marvell Technology’s current share price also implies a price-to-book (P/B) multiple of 2.4x. The following table summarizes some other key fundamental ratios:

Data as of December 3, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date August 3, 2019
Stock Price (Current) $25.81
P/E Ratio -41.8x
P/E Ratio (Fwd) 37.7x
PEG Ratio 0.7
Total Debt to Capital (%) 9.4%
Levered Free Cash Flow $561.3 million
Enterprise Value / EBITDA 63.0x

Source: Finbox

Company Profile: Marvell Technology Group Ltd.

Marvell Technology Group Ltd. is a large-cap stock with a market capitalization of $17.21 billion and a total enterprise value of $18.466 billion. The company operates in the Information Technology sector and the Semiconductors & Semiconductor Equipment industry.

Marvell Technology Group Ltd. designs, develops, and markets analog, mixed-signal, digital signal processing, and embedded and standalone integrated circuits. It offers a range of storage products, including hard disk drive (HDD) and solid-state drive controllers, as well as preamplifiers; supports a variety of host system interfaces consisting of serial attached SCSI (SAS), serial advanced technology attachment (SATA), peripheral component interconnect express, and non-volatile memory express; and develops software-enabled silicon solutions comprising SATA port multipliers, bridges, SATA, SAS, and non-volatile memory express redundant array of independent disks controllers and converged storage processors for enterprises, data centers, and cloud computing businesses.

The company also provides networking products, which comprise Ethernet solutions consisting of Ethernet switches, Ethernet physical-layer transceivers, embedded communication processors, and Ethernet adapters and controllers. In addition, it offers a portfolio of connectivity solutions, including Wi-Fi and Wi-Fi/Bluetooth integrated system-on-a-chip (SoC) products, which are integrated into various end devices, such as enterprise access points, home gateways and voice assistants, multimedia devices, gaming products, printers, automotive infotainment, and telematics units, and smart industrial devices.

Further, the company provides printer SoC products and application processors. It has operations in the United States, China, Malaysia, the Philippines, Thailand, Singapore, India, Israel, Japan, South Korea, Taiwan, and Vietnam. Marvell Technology Group Ltd. has a strategic partnership with Arm for the design and development of Marvell ThunderX server processor technology.

The company was founded in 1995 and is headquartered in Hamilton, Bermuda.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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