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Why Is Marvell (MRVL) Down 9.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Marvell Technology (MRVL - Free Report) . Shares have lost about 9.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marvell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Marvell Q4 Earnings & Revenues Beat Estimates
Marvell reported fourth-quarter fiscal 2020 non-GAAP earnings of 17 cents, which surpassed the Zacks Consensus Estimate by 6.25%. However, it declined 32% from the year-ago quarter.
Marvell’s revenues of $717.7 million also outpaced the consensus mark of $712 million. However, the figure declined 3.6% year over year. Macroeconomic uncertainties and the divestiture of the Wi-Fi business to NXP Semiconductors (NXPI) on Dec 6, 2019, hurt the top line. Nonetheless, key deal wins across various OEMs, which resulted in strong bookings, were a breather.
Quarter Details
In the end markets, storage revenues (41% of total revenues) fell 6.5% year over year to $296.5 million but grew 3% sequentially on increased demand for both of its storage controller product lines. Marvell’s HDD business continued to benefit from its strengthening foothold in the nearline market. Its enterprise and data center SSD businesses also continued to recover in the fourth quarter.
The networking business (52%) revenues dropped 2.8% year over year to $377 million due to macroeconomic challenges, which continued to hurt demand in the enterprise end market. Additionally, the divestment of the Wi-Fi business was another dampener. However, full quarter contributions from the Avera and Aquantia acquisitions led to 14% sequential growth in the segment.
Other product revenues (7%) during the fiscal third quarter increased 10.4% on a year-over-year basis to $44.5 million.
Margins
Marvell’s non-GAAP gross profit was $446.8 million, down 6.9% on a year-over-year basis. Non-GAAP gross margin contracted 220 basis points (bps) to 62.3%.
Non-GAAP operating expenses increased 7% year over year to $306.1 million. Non-GAAP operating margin contracted 640 bps to 19.6%.
Balance Sheet
Marvell exited the quarter with cash and cash equivalents of $647.6 million compared with $438.4 million in the previous quarter.
The company’s long-term debt totaled $1.44 billion compared with $2.04 billion in the previous quarter. Cash from operating activities amounted to $55.8 million compared with $65.5 million in the prior quarter.
During the quarter, Marvell paid out dividends of around $40 million to shareholders.
Guidance
Marvell's guidance for the first quarter of fiscal 2021 takes into account the U.S. Government's export restriction on certain Chinese customers. The company also expects a 5% decrease in revenues due to the uncertainty associated with the coronavirus.
The company projects first-quarter fiscal 2021 revenues of $680 million (up or down up to 5%). The Zacks Consensus Estimate for revenues stands at $711.2 million, suggesting a decline of 4.52% from the year-ago quarter’s reported figure.
Non-GAAP earnings per share are expected between 11 cents and 17 cents. The consensus mark of 16 cents indicates a 36% year-over-year decline.
Networking revenues for the first quarter are expected to witness a low to mid-single-digit decline sequentially due to a lack of Wi-Fi revenues.
The first quarter is typically and seasonally a weak quarter for the storage business. Due to coronavirus-related impacts, a mid-single-digit sequential decline is expected to hurt the storage segment.
Further, the company expects operating expenses to decline from the second quarter of fiscal 2021. Operating expenses are expected to decrease to $300 million in the fourth quarter of fiscal 2021.
Management expects Avera to contribute $300 million to revenues for fiscal 2021. Moreover, Avera is expected to bring an additional $4 billion to Marvell’s addressable market across the data center, carrier, enterprise and automotive end markets.
Management expects strong growth in 5G-related revenues in the second half of fiscal 2021, driven by continued deployment in Korea and the beginning of higher 5G adoption in Japan and other countries.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 44.06% due to these changes.
VGM Scores
At this time, Marvell has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Marvell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Marvell (MRVL) Down 9.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Marvell Technology (MRVL - Free Report) . Shares have lost about 9.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Marvell due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Marvell Q4 Earnings & Revenues Beat Estimates
Marvell reported fourth-quarter fiscal 2020 non-GAAP earnings of 17 cents, which surpassed the Zacks Consensus Estimate by 6.25%. However, it declined 32% from the year-ago quarter.
Marvell’s revenues of $717.7 million also outpaced the consensus mark of $712 million. However, the figure declined 3.6% year over year. Macroeconomic uncertainties and the divestiture of the Wi-Fi business to NXP Semiconductors (NXPI) on Dec 6, 2019, hurt the top line. Nonetheless, key deal wins across various OEMs, which resulted in strong bookings, were a breather.
Quarter Details
In the end markets, storage revenues (41% of total revenues) fell 6.5% year over year to $296.5 million but grew 3% sequentially on increased demand for both of its storage controller product lines. Marvell’s HDD business continued to benefit from its strengthening foothold in the nearline market. Its enterprise and data center SSD businesses also continued to recover in the fourth quarter.
The networking business (52%) revenues dropped 2.8% year over year to $377 million due to macroeconomic challenges, which continued to hurt demand in the enterprise end market. Additionally, the divestment of the Wi-Fi business was another dampener. However, full quarter contributions from the Avera and Aquantia acquisitions led to 14% sequential growth in the segment.
Other product revenues (7%) during the fiscal third quarter increased 10.4% on a year-over-year basis to $44.5 million.
Margins
Marvell’s non-GAAP gross profit was $446.8 million, down 6.9% on a year-over-year basis. Non-GAAP gross margin contracted 220 basis points (bps) to 62.3%.
Non-GAAP operating expenses increased 7% year over year to $306.1 million. Non-GAAP operating margin contracted 640 bps to 19.6%.
Balance Sheet
Marvell exited the quarter with cash and cash equivalents of $647.6 million compared with $438.4 million in the previous quarter.
The company’s long-term debt totaled $1.44 billion compared with $2.04 billion in the previous quarter. Cash from operating activities amounted to $55.8 million compared with $65.5 million in the prior quarter.
During the quarter, Marvell paid out dividends of around $40 million to shareholders.
Guidance
Marvell's guidance for the first quarter of fiscal 2021 takes into account the U.S. Government's export restriction on certain Chinese customers. The company also expects a 5% decrease in revenues due to the uncertainty associated with the coronavirus.
The company projects first-quarter fiscal 2021 revenues of $680 million (up or down up to 5%). The Zacks Consensus Estimate for revenues stands at $711.2 million, suggesting a decline of 4.52% from the year-ago quarter’s reported figure.
Non-GAAP earnings per share are expected between 11 cents and 17 cents. The consensus mark of 16 cents indicates a 36% year-over-year decline.
Networking revenues for the first quarter are expected to witness a low to mid-single-digit decline sequentially due to a lack of Wi-Fi revenues.
The first quarter is typically and seasonally a weak quarter for the storage business. Due to coronavirus-related impacts, a mid-single-digit sequential decline is expected to hurt the storage segment.
Further, the company expects operating expenses to decline from the second quarter of fiscal 2021. Operating expenses are expected to decrease to $300 million in the fourth quarter of fiscal 2021.
Management expects Avera to contribute $300 million to revenues for fiscal 2021. Moreover, Avera is expected to bring an additional $4 billion to Marvell’s addressable market across the data center, carrier, enterprise and automotive end markets.
Management expects strong growth in 5G-related revenues in the second half of fiscal 2021, driven by continued deployment in Korea and the beginning of higher 5G adoption in Japan and other countries.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 44.06% due to these changes.
VGM Scores
At this time, Marvell has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Marvell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.