HomeMost PopularInvestingMarvell Technology Set to Crush Expectations in Q3 Earnings Showdown

Marvell Technology Set to Crush Expectations in Q3 Earnings Showdown

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Marvell Technology MRVL is about to show everyone how it’s done this week when it reports its third-quarter fiscal 2024 results after the closing bell on Nov 30.

In this upcoming quarter, the company has set its sights high, projecting total revenues of $1.4 billion (+/- 5%). Marvell expects non-GAAP earnings per share for the quarter to be around 40 cents (+/- 5 cents).

For the third fiscal quarter, the Zacks Consensus Estimate for revenues is fixed at $1.40 billion, reflecting an 8.9% decrease from the same quarter a year ago. The consensus mark for earnings is locked at 40 cents per share, signaling a substantial 29.8% year-over-year decrease.

Marvell’s earnings have been a bit of a mixed bag in the last year. The company beat the Zacks Consensus Estimate twice in the last four quarters, matched it once, and missed on one occasion. Their average surprise weighed in at 1.7%.

In the most recent financial results for the second quarter, the semiconductor company reported revenues of $1.34 billion, surpassing the consensus mark of $1.33 billion. The top line also outran the midpoint of management’s guidance of $1.33 billion (+/- 5%).

What’s more, it reported non-GAAP earnings of 33 cents per share, just edging out the Zacks Consensus Estimate by a penny. The bottom line also sailed above the midpoint of the company’s previous forecast of 32 cents (+/- 5 cents).

They’ve been building up anticipation before this announcement—now it’s time to see how it all shakes out.

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

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

Facing the Forecast

Marvell has prepared itself for a rough ride in this quarter. They anticipate that softness in their product demand, as original equipment manufacturers (OEMs) reschedule orders to handle excess chip inventories, may negatively influence performance. Due to the broadening inventory corrections, MRVL’s revenues from its Data Center end market could slip this quarter.

Our forecast for the Data Center division’s revenues in the third quarter comes in at $532.7 million, signaling a 15.1% year-over-year decrease. However, the leadership expects overall Data Center revenues to soar in the mid-teen percentage range sequentially, driven primarily by continued robust growth from Cloud AI and the benefits of a low base in the storage sub-division.

Meanwhile, global economic trouble and ongoing macroeconomic and geopolitical issues have slowed down large-scale IT spending plans, with businesses postponing their big moves. This could have a negative impact on Marvell’s overall financial performance this quarter. Moreover, ongoing inventory correction actions by customers might have taken a toll on the division’s overall performance.

Marvell had predicted that overall Enterprise Networking revenues would decrease sequentially in the low-teen percentage range. Our estimate for the segment’s third-quarter revenues indicates a 22.8% year-over-year decline at $290.4 million.

As for the overall Carrier Infrastructure end market, we predict that revenues will increase year over year, driven by continued growth in wireless customers, partially offset by ongoing demand weakness and inventory digestion at wired customers. Management forecasts that Carrier Infrastructure revenues will boost in the low-single-digit percentage range sequentially. Our estimate suggests that the division’s third-quarter revenues will expand by 3.8% year over year to $281.8 million.

Insider Predictions

Our tried-and-true model is signaling an earnings beat for Marvell this earnings season. The combo of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the likelihood of an earnings beat—a situation that looks good for Marvell at this moment.

Earnings ESP: Earnings ESP, which measures the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +0.18%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: MRVL holds a Zacks Rank #3.

Other Stocks With the Favorable Combination

According to our model, Micron Technology MU, Snowflake SNOW, and Paychex PAYX also possess the right combination of elements to post an earnings beat in their upcoming releases.

Micron holds a Zacks Rank #3 and boasts an Earnings ESP of +26.69%. The company is lined up to report its first-quarter fiscal 2024 results on Dec 20. Its earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, with two misses thrown in, averaging a -67.7% surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Micron’s first-quarter earnings anticipates a loss of $1.02 per share, substantially higher than the year-ago quarter’s loss of 4 cents. The consensus mark for revenues is set at $4.43 billion, suggesting an 8.5% year-over-year increase.

Snowflake is slated to reveal its third-quarter fiscal 2024 results on Nov 29. The company is perched at a Zacks Rank #2 and an Earnings ESP of +67.33%. Snowflake’s earnings have outperformed the Zacks Consensus Estimate for the last four quarters, with an average surprise of 244.5%.

The Zacks Consensus Estimate for third-quarter earnings lands at 16 cents per share, indicating a 45.5% boost from the year-ago quarter’s earnings of 11 cents. Snowflake’s quarterly revenues are expected to jump by 27.6% year over year to $710.5 million.

Paychex flaunts a Zacks Rank #3 and an Earnings ESP of +1.11%. The company is scheduled to report its second-quarter fiscal 2024 results on Dec 28. Its earnings topped the Zacks Consensus Estimate three times in the last four quarters, with a single miss, and the average surprise being 2.3%.

The Zacks Consensus Estimate for Paychex’s second-quarter earnings sits at $1.07 per share, indicating an 8.1% year-over-year growth. It is estimated to report revenues of $1.26 billion, foreseeing an approximately 6.1% surge from the year-ago quarter.

Keep up to date with the upcoming earnings announcements using the Zacks Earnings Calendar.

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Paychex, Inc. (PAYX) : Free Stock Analysis Report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report

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