Marvell (MRVL) Falls Despite Earnings Beat

NEW YORK (TheStreet) -- Marvell (MRVL) was falling 2.3% to $15.75 Friday despite beating analysts' estimates for fourth-quarter earnings and revenue.

For the fourth quarter Marvell posted earnings of 29 cents a share, comfortably beating analysts' estimates of 25 cents a share. Revenue rose 20% from the year-ago quarter to $932 million. Analysts surveyed by Thomson Reuters expected revenue of $901 million.

The fiscal year was "the start of a turnaround" for Marvell, CEO Sehat Sutardja said in a statement. "We are investing in advanced technologies that will help drive increased business opportunities and continued revenue and profit growth in all of our target end markets."

For the first quarter the chipmaker expects earnings of between 20 cents and 24 cents a share, while analysts predict earnings of 21 cents a share. Marvell expects to see revenue between $870 million and $910 million in the quarter, compared to analysts' estimates of $849 million.

Must read: Expect Maximum Overbought Reading Midweek

TheStreet Ratings team rates MARVELL TECHNOLOGY GROUP LTD as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MARVELL TECHNOLOGY GROUP LTD (MRVL) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 19.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • MRVL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.00, which clearly demonstrates the ability to cover short-term cash needs.
  • MARVELL TECHNOLOGY GROUP LTD reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MARVELL TECHNOLOGY GROUP LTD reported lower earnings of $0.53 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($0.99 versus $0.53).
  • The gross profit margin for MARVELL TECHNOLOGY GROUP LTD is rather high; currently it is at 52.85%. Regardless of MRVL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.07% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, MARVELL TECHNOLOGY GROUP LTD's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MRVL Ratings Report

More from Markets

Dow Sinks for Eighth Straight Session; Intel's CEO Departs -- ICYMI

Dow Sinks for Eighth Straight Session; Intel's CEO Departs -- ICYMI

Dow Logs Eighth Straight Drop as Stocks Slump

Dow Logs Eighth Straight Drop as Stocks Slump

This Is What's Hot Thursday - Stocks Slide, Intel's CEO Woes & Major Movers

This Is What's Hot Thursday - Stocks Slide, Intel's CEO Woes & Major Movers

U.S. Banks Pass Fed 'Stress Test' With Room for Dividends, Buybacks

U.S. Banks Pass Fed 'Stress Test' With Room for Dividends, Buybacks

U.S. Drillers at Mercy of Iran, Saudi Production Spat as OPEC Meeting Begins

U.S. Drillers at Mercy of Iran, Saudi Production Spat as OPEC Meeting Begins