Marvell Technology, Inc. (MRVL) is Attracting Investor Attention: Here is What You Should Know
Marvell Technology (MRVL) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock.Shares of this chipmaker have returned +3.5% over the past month versus the Zacks S&P 500 composite's +0.9% change. The Zacks Electronics - Semiconductors industry, to which Marvell belongs, has gained 11.2% over this period. Now the key question is: Where could the stock be headed in the near term?While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.Marvell is expected to post earnings of $0.79 per share for the current quarter, representing a year-over-year change of +31.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +4.4%.The consensus earnings estimate of $2.84 for the current fiscal year indicates a year-over-year change of +80.9%. This estimate has changed +2.4% over the last 30 days.For the next fiscal year, the consensus earnings estimate of $3.57 indicates a change of +25.7% from what Marvell is expected to report a year ago. Over the past month, the estimate has changed +6.8%.Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Marvell is rated Zacks Rank #1 (Strong Buy).The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSProjected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.In the case of Marvell, the consensus sales estimate of $2.21 billion for the current quarter points to a year-over-year change of +21.4%. The $8.17 billion and $9.95 billion estimates for the current and next fiscal years indicate changes of +41.7% and +21.7%, respectively.Last Reported Results and Surprise HistoryMarvell reported revenues of $2.07 billion in the last reported quarter, representing a year-over-year change of +36.8%. EPS of $0.76 for the same period compares with $0.43 a year ago.Compared to the Zacks Consensus Estimate of $2.06 billion, the reported revenues represent a surprise of +0.61%. The EPS surprise was +1.33%.Over the last four quarters, Marvell surpassed consensus EPS estimates three times. The company topped consensus revenue estimates three times over this period.ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Marvell is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Marvell. However, its Zacks Rank #1 does suggest that it may outperform the broader market in the near term.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Marvell Technology, Inc. (MRVL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
Quelle: Zacks