Marvell Technology (MRVL, Financial) is focused on manufacturing general purpose microcontrollers having integrated wireless connectivity for the Internet of Things market. This is a budding market having considerable growth potential. Marvell’s EZ-Connect wireless microcontrollers have also received accelerated acceptance. It has highly solid design pipeline for majority of applications that include commercial IoT applications, home automation and other smartphone and lightning appliances throughout North America and China.
Marvell is already witnessing volume ramps from major customers in home automation and lighting product categories. Lately, Marvell declared a design win with its EZ-Connect microcontrollers at Xiaomi for allowing their smartphone edition, and estimates this to attract significant traction in the quarters to come.
Driving growth in video
In video business, Marvell is highly pleased to witness the success of Google Chromecast in the South American, European, North American and currently Asian market; and its third quarter revenue expanded more than 30% from the last quarter.
Considering the video business for the service providers, LG U+ is a key service provider in Korea and released their 4K platform leveraging its ARMADA 1500 solution. Further, many other service providers are believed to commence shipping their own IPTV versions and over-the-counter hybrid set-top-boxes using its ARMADA 1500 family of video SoCs for the coming several months.
For the networking segment, Marvell launched the Questflo product line of advanced network search engines in the previous quarter that widens its expanding networking product portfolio.
Conclusion
The trailing P/E and forward P/E ratios of 15.80 and 12.30 respectively represent significant cost-cutting efforts of the company and better than the industry’s average P/E of 27.05. The PEG ratio of 1.38, above 1 indicate slower growth and comparable to the industry’s average of 1.01. The profit margin of 11.92% is satisfactory. However, the revenue per share and diluted EPS of 7.46 and 0.88 respectively depicts poor investor earnings.
The quarterly revenue growth of -0.10% is poor but, the quarterly earnings growth of 11.80% is healthy and signifies solid shareholder earnings growth. The current ratio of 4.66 suggests the robustness of the company’s balance sheet. Finally, the investors are advised to invest into Marvell Technology Inc. looking at the solid long-term growth prospects indicated by the CAGR for the next 5 years per annum of 8.86% and comparable to the industry’s average of 19.53% and expect promising returns in a long run.
