Shares of Marvell Technology Group Ltd. (MRVL - Free Report) hit a new 52-week high of $14.80 on Nov 18, 2016, eventually closing at the same price. The company’s shares have been particularly buoyant in recent times, jumping 14.6% over the past one month. The closing share price also represents a strong one-year return of 69.9% and a year-to-date return of 67.8%.
The price increase was supported by a significant rise in share volume. Average volume of shares traded over the last three months was approximately 5.34M.
What is Driving the Stock Upward?
Marvell’s shares have been rising since the company declared better-than-expected third-quarter 2017 results on Nov 17, 2016. Also, an encouraging fourth-quarter 2017 earnings outlook, solid cash flows and strong demand for its 4G LTE products drove Marvell shares higher.
The company reported adjusted earnings (including stock-based compensation but excluding amortization, acquisition, restructuring, legal related expenses and other one-time items) of 15 cents per share, which comfortably beat the Zacks Consensus Estimate of 5 cents. Also, reported earnings marked a reversal from the year-ago loss of 1 cent per share.
Though Marvell’s revenues fell 3% year over year to $654.4 million, the reported figure surpassed the Zacks Consensus Estimate of $612 million.
The company recently authorized an additional stock repurchase program, thereby maintaining the trend of returning wealth to its shareholders from time to time, which further adds to its positives.
Marvell approved a $1 billion share repurchase program. The new authorization will replace the earlier $3.25 billion share purchase program. The company had roughly $150 million worth of shares available for repurchase under the program. The latest buyback scheme reflects the company’s sound financial position and favorable prospects.
Marvell is a cash rich company having a strong balance sheet. It exited the last reported quarter with cash, cash equivalents and short-term investments of $1.65 billion. Cash from operating activities amounted to $121.5 million. The company carried no long-term debt. During the quarter, Marvell also paid $30.7 million as dividend to its shareholders and repurchased $56.5 million worth shares. We believe that an increase in share buyback authorization and dividend payment affirms the company’s optimistic outlook and growth prospects.
Moreover, the company provided an encouraging fourth-quarter fiscal 2017 earnings guidance. The company expects non-GAAP earnings per share for fourth-quarter fiscal 2017 to be 17 cents to 21 cents while the Zacks Consensus Estimate is pegged at 6 cents.
An encouraging fourth-quarter outlook and upbeat overall trend resulted in upward estimate revisions for Marvell. Over the last 30 days, two out of 10 estimates for Marvell were revised upward for fiscal 2017. The Zacks Consensus Estimate for fiscal 2017 moved up 5.5% (1 cent) to 19 cents per share.
However, competition in the semiconductor market from major players such as Intel Corp. (INTC - Free Report) and Texas Instruments Inc. (TXN - Free Report) remains a headwind.
At present, Marvell has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stock to Consider
Another stock worth considering in the technology sector is Seagate Technology plc (STX - Free Report) , sporting a Zacks Rank #1.
Seagate has a long-term expected earnings per share growth rate of 4.05%.
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