Marvell Technology, Inc. (MRVL) Is a Trending Stock: Facts to Know Before Betting on It

Marvell Technology (MRVL) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.Shares of this chipmaker have returned +14.9% over the past month versus the Zacks S&P 500 composite's +1% change. The Zacks Technology Services industry, to which Marvell belongs, has lost 0.8% over this period. Now the key question is: Where could the stock be headed in the near term?While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.Earnings Estimate RevisionsRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.Marvell is expected to post earnings of $0.40 per share for the current quarter, representing a year-over-year change of -2.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.The consensus earnings estimate of $1.46 for the current fiscal year indicates a year-over-year change of -3.3%. This estimate has remained unchanged over the last 30 days.For the next fiscal year, the consensus earnings estimate of $2.49 indicates a change of +70.5% from what Marvell is expected to report a year ago. Over the past month, the estimate has remained unchanged.Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Marvell is rated Zacks Rank #2 (Buy).The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:12 Month EPSProjected Revenue GrowthEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.In the case of Marvell, the consensus sales estimate of $1.45 billion for the current quarter points to a year-over-year change of +2.5%. The $5.52 billion and $7.43 billion estimates for the current and next fiscal years indicate changes of +0.3% and +34.5%, respectively.Last Reported Results and Surprise HistoryMarvell reported revenues of $1.27 billion in the last reported quarter, representing a year-over-year change of -5.1%. EPS of $0.30 for the same period compares with $0.33 a year ago.Compared to the Zacks Consensus Estimate of $1.25 billion, the reported revenues represent a surprise of +1.79%. The EPS surprise was +3.45%.Over the last four quarters, Marvell surpassed consensus EPS estimates three times. The company topped consensus revenue estimates each time over this period.ValuationWithout considering a stock's valuation, no investment decision can be efficient. In predicting a stock's future price performance, it's crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company's growth prospects.Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.Marvell is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Marvell. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Marvell Technology, Inc. (MRVL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks