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Marvell (MRVL) to Report Q4 Earnings: What's in Store?

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Marvell Technology Group Ltd. (MRVL - Free Report) is set to report fourth-quarter fiscal 2017 results on Mar 2, 2017. Last quarter, the company posted a positive earnings surprise of 200.0%.

Let's see how things are shaping up for this announcement.

Factors to Consider

Marvell Technology is a leading designer, developer and supplier of mixed-signal and digital signal processing integrated circuit for high-speed, high-density, digital data storage and broadband digital data networking markets.

It should be noted that the Storage business is the biggest contributor to the company’s total revenue, accounting for approximately 50%. The company during its third-quarter conference call projected a sequential fall in the segment’s revenues due to seasonal factors.

However, in our opinion, we may see sequential growth in the soon-to-be-reported quarter. This is so because its two main customers – Western Digital (WDC - Free Report) and Seagate, together constituting 30% of Storage revenues, have reported modest sequential growth in the last quarterly results.

Furthermore, we believe that the strong demand for Marvell’s 4G LTE products will remain the key growth driver of fourth-quarter results. This will be further supported by growth from the company’s wide range of newly-launched Internet of Things (IoT) solutions.

Going forward, the company’s recent restructuring initiative will help Marvell to improve cloud infrastructure and applications, which are expected to drive the company’s top line in the to-be-reported quarter.

Moreover, Marvell is a promising player in the solid state drive (SSD) controllers market. Over the coming years, it expects an increasing number of PCs/servers to use flash-based solid state technology for storage. SSD demand will also increase and could even surpass manufacturing capacity, leading to periodic shortage and higher pricing in the to-be reported quarter. Marvell is benefiting from growing demand for SSD products.

However, competition in the semiconductor market from major players such as Intel Corp. and Texas Instruments Inc. remains a headwind.

Earnings Whispers

Our proven model does not conclusively show that Marvell is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Marvell is 0.00% since the Most Accurate estimate of 13 cents stands in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Marvell carries a Zacks Rank #1. Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

NV5 Global, Inc. (NVEE - Free Report) has an Earnings ESP of +4.88% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Broadcom Limited (AVGO - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank #3.

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