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Marvell Technology (MRVL) Q1 Earnings: What's in the Cards?

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Marvell Technology Group Ltd. (MRVL - Free Report) is set to report first-quarter fiscal 2019 earnings on May 31.

In the trailing four quarters, Marvell’s earnings surpassed the Zacks Consensus Estimate each time, with an average positive surprise of 6.9%. In the last reported quarter, the company delivered a positive earnings surprise of 3.2%. So, let’s see how things are shaping up prior to this announcement.

Factors to Consider

Marvell is a fabless designer, developer and marketer of analog, mixed-signal and digital signal processing integrated circuits. We believe strong demand for Marvell’s 4G LTE products and acquisition synergies will act as catalysts. The company’s current restructuring initiative will help it improve its cloud infrastructure and applications, which is anticipated to drive the top and bottom lines.

Notably, Marvell, is also expected to keep on benefiting from the growing demand for SSD products. The storage market is witnessing a steady increase in demand, given fast-growing data volume, especially the exponential growth in unstructured data.

The company’s storage revenues contributed to over 50% of total revenues in fiscal 2018. Marvell’s recent launch of “NVM Express (NVMe)-based chipset solutions” is expected to meet new-age data center related SSD needs, which will be a further positive.

Additionally, during the soon-to-be reported quarter, the company also announced that it is integrating the first-of-its-kind Secure Automotive Ethernet Switch into NVIDIA (NVDA - Free Report) DRIVE Pegasus Platform that will aid in level 5 autonomy of self-driving cars. We believe these initiatives will be beneficial for the company’s financials going ahead.

Nonetheless, intensifying competition in the High Definition (HD) storage drive market makes us increasingly cautious about the stock’s growth prospects.

What the Zacks Model Unveils?

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 at least 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Marvell currently carries a Zacks Rank #3, which increases the predictive power of ESP, but an ESP of 0.00% makes surprise prediction difficult.

The Zacks Consensus Estimate for the fiscal first quarter is pegged at 31 cents, reflecting a massive year-over-year increase of 29.2%. Further, analysts polled by Zacks anticipate revenues of $601.4 million, up 3.8% from the year-ago quarter.

Stocks With a Favorable Combination

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

Autodesk, Inc. (ADSK - Free Report) has an Earnings ESP of +11.6% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palo Alto Networks, Inc. (PANW - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank #3.

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