What's in the Offing for Marvell (MRVL) This Earnings Season?

Marvell Technology MRVL is slated to report fourth-quarter fiscal 2024 results after market close on Mar 7.

For the fiscal fourth quarter, the company projects total revenues of $1.42 billion (+/- 5%). Marvell projects non-GAAP earnings per share for the fiscal fourth quarter to be approximately 46 cents (+/- 5 cents).

The Zacks Consensus Estimate for revenues is pegged at $1.42 billion, while the consensus mark for earnings is pegged at 46 cents per share. Compared with the year-ago quarter, estimates indicate top and bottom lines to remain flat.

Marvell’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while matching on one occasion, the average surprise being 3.1%.

In the last reported financial results for the third quarter, the semiconductor company reported revenues of $1.42 billion, which surpassed the consensus mark of $1.40 billion. The top line was also higher than the midpoint of management’s guidance of $1.40 billion (+/- 5%).

Moreover, it reported non-GAAP earnings of 41 cents per share, beating the Zacks Consensus Estimate by a penny. The bottom line was also above the midpoint of the company’s previous forecast of 40 cents (+/- 5 cents).

Let’s see how things have shaped up before this announcement.

Marvell Technology, Inc. Price and EPS Surprise Marvell Technology, Inc. Price and EPS Surprise

Marvell Technology, Inc. price-eps-surprise | Marvell Technology, Inc. Quote

Factors to Consider

Marvell’s fourth-quarter performance is likely to have been negatively impacted by softness in its product demand as enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. Moreover, continued inventory correction actions by customers are likely to have hurt the company’s overall performance in the to-be-reported quarter.

During its lastearnings conference call Marvell projected to report a massive sequential decline in revenues across the majority of its end-market segments. The company had forecasted that overall Enterprise Networking revenues would decline sequentially in the mid-single-digit percentage range, while revenues from the Consumer end market would decrease in the mid-teen percentage on a quarter-over-quarter basis.

Our fourth-quarter revenue estimate for Enterprise Networking is pegged at $257.6 million, indicating a year-over-year decline of 29.7%. Our model estimate suggests that revenues from the Consumer end market will plunge 20.2% to $143.5 million.

Marvell projected that revenues from the Carrier Infrastructure end market would decline in the mid-40% range on a sequential basis, mainly due to a slowdown in IT spending as telecom carriers manage their capital expenditure amid ongoing macroeconomic uncertainties. Moreover, the end market’s overall performance is anticipated to be hurt by the completion of the initial wave of the 5G rollout. Our fourth-quarter revenue estimate for the Carrier Infrastructure is pegged at $175.2 million, indicating a year-over-year decline of 36.4%.

For the Automotive/Industrial, Marvell expects revenues to decline 20% sequentially, primarily due to weakness in the industrial end market, which includes aerospace and defense. Our estimate for the segment’s fourth-quarter revenues is pegged at $85.3 million, calling for a year-over-year decrease of 14.2%.

However, the negative impact of the dismal performance across the aforementioned divisions is likely to have been partially offset by improved performance in the Data Center end market. Marvell projects revenues from the Data Center end market to increase in the mid-30% range on a sequential basis on strong growth in compute programs for artificial intelligence. Our estimate for the Data Center division’s fourth-quarter revenues is pegged at $750.4 million, indicating a year-over-year increase of 50.8%.

What Our Model Says

Our proven model does not conclusively predict an earnings beat for Marvell this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Though MRVL currently carries a Zacks Rank of 2, it has an Earnings ESP of -0.08%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Per our model, The Gap GPS, Costco Wholesale COST and Guidewire Software GWRE have the right combination of elements to post an earnings beat in their upcoming releases.

The Gap sports a Zacks Rank #1 and has an Earnings ESP of +54.71%. The company is scheduled to report fourth-quarter fiscal 2024 results on Mar 7. Its bottom-line result surpassed the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being 137.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Gap’s fourth-quarter bottom line is pegged at earnings of 20 cents per share, indicating a robust improvement from the year-ago quarter’s loss of 75 cents. The consensus mark for revenues stands at $4.21 billion, calling for a year-over-year decrease of 0.7%.

Costco carries a Zacks Rank #2 and has an Earnings ESP of +1.58%. The company is slated to report second-quarter fiscal 2024 results on Mar 7. Its earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, with the average surprise being 2.6%.

The Zacks Consensus Estimate for Costco’s second-quarter earnings stands at $3.60 per share, indicating a year-over-year increase of 9.1%. It is estimated to report revenues of $59.2 billion, which implies an increase of approximately 7.1% from the year-ago quarter.

Guidewire Software is slated to report second-quarter fiscal 2024 results on Mar 7. The company has a Zacks Rank #3 and an Earnings ESP of +4.76% at present. Guidewire Software’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being -42.22%.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 21 cents per share, suggesting a strong improvement from the year-ago quarter’s loss of 21 cents. Guidewire Software’s quarterly revenues are estimated to improve 3.6% to $240.9 million.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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