Marvell Technology Group
) is set to report its fourth quarter 2013 results on Feb 21. In
the prior quarter, the company posted a 6.7% negative surprise.
Let's see how things are shaping up for this semiconductor chip
Growth Factors this Past Quarter
Marvell's third quarter 2013 revenues missed its own guidance and
were 17.8% down from the year-ago quarter. The year-over-year
decline was mainly due to the macro-economic slowdown and a
lackluster PC market, which badly affected chip demand. Revenues
from all the end markets decreased on a year-over-year basis.
Higher commodity costs and an unfavorable product mix led to
gross margin contraction. All these led Marvell to post earnings
of 14 cents per share, which missed the Zacks Consensus Estimate.
Marvell provided a weak fourth-quarter revenue forecast citing
weakness in the personal computer market, which will continue to
affect its HDD businesses. But the guidance reflects some signs
of improving networking and storage end markets. However,
smartphone weakness and guidance cut at its largest HDD customers
Western Digital Corp. (WDC) and Seagate Technology plc (STX)
The Zacks Consensus Estimate for the fourth quarter stands at 8
cents while that for fiscal 2013 stands at 60 cents.
Marvell posted positive surprises in the fourth quarter of 2012
and the first quarter of 2013 and negative surprises in the
second and third quarters of 2013. This leads to an average
positive surprise of 6.4% for the preceding four quarters.
No estimate revisions were noticed for both the fourth quarter
and fiscal 2013 over the past 30 and 60 days. As a result, the
Zacks Consensus Estimates have remained unchanged for the fourth
quarter as well as for 2013.
The lack of estimate revisions signals that a very big surprise
this quarter is unlikely. Moreover, the stock carries a Zacks
Rank #3 (Hold).
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Our model states that a stock needs to have both a positive Zacks
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, #2 or #3 to beat earnings estimates. You
could, therefore, consider stocks like:
), with Zacks Earnings ESP of +4.6% and Zacks Rank #1 (Strong
), with Zacks Earnings ESP of +1.6% and Zacks Rank #2 (Buy)
) with Zacks Earnings ESP of +15.8% and Zacks Rank #2 (Buy).
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