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Marvell (MRVL) to Report Q1 Earnings: Will it Surprise?

Zacks

Marvell Technology Group Ltd. MRVL is set to report first-quarter 2018 results on May 25. Last quarter, the company delivered a positive earnings surprise of 38.46%. Let's see how things are shaping up for this announcement.

Factors at Play

Marvell reported modest fourth-quarter fiscal 2017 results, wherein the bottom line surpassed the Zacks Consensus Estimate and the top line was almost in line with the same. However, revenues slumped on a year-over-year basis mainly due to lower demand in the mobile handset business.

Though macro headwinds and stringent regulations might put the company's financials under pressure in the near term, we believe that the strong demand for Marvell’s 4G LTE products could be a growth driver. This will be supported by growth from the company’s wide range of newly-launched Internet of Things (IoT) solutions.


Going forward, Marvell’s recent restructuring initiatives will help it in improving cloud infrastructure and applications, which are expected to drive the company’s top line. The latest buyback scheme also reflects the company’s sound financial position and favorable prospects.

However, competition in the semiconductor market from major players such as Intel Corp. INTC and Texas Instruments Inc. is a headwind.

Marvell Technology Group Ltd. Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Marvell will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Marvell’s ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate stand at 16 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Marvell carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter.

Best Buy Co., Inc. BBY, with an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

International Game Technology IGT, with an Earnings ESP of +8.51% and a Zacks Rank #3.

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