Marvell Technology (MRVL) has been in a rut all year long as any uptick in the stock has been met by sellers. However, it sure seems like the market is overlooking the value in the stock as all three of the metrics suggest that the stock is undervalued. Below is an in depth look at the valuation metrics and the stock chart.
Valuation: Marvell Technology's trailing 5 year valuation metrics suggest that the stock is undervalued as all of the metrics are below their respective 5 year averages. Marvell Technology's current P/B ratio is 1.6 and it has averaged 2.1 over the past 5 years with a high of 3.3 and low of 1.1. Marvell Technology's current P/S ratio is 2.4 and it has averaged 3 over the past 5 years with a high of 4.3 and low of 1.3. Marvell Technology's current P/E ratio is 14 and it has averaged 14.1 over the past 2 years with a high of 20.3 and low of 11.8.
Price Target: The consensus price target for the analysts who follow Marvell Technology is $18. That is upside of 33% from today's stock price of $13.9 and suggests that the stock is undervalued at these levels. This also suggests that the stock has significant upside and is an attractive opportunity at these levels.
Forward Valuation: Marvell Technology is currently trading at about $14 a share with analysts expecting EPS of $1.46 next year, an earnings increase of 23% y/y, for a forward P/E ratio of 9.5. Taking a look at the company's publicly traded comparisons will give us a better idea of the stock's relative valuation. Avago Technologies (AVGO) is currently trading at about $32 a share with analysts expecting EPS of $2.85 next year, an earnings increase of 13% y/y, for a forward P/E ratio of 11.1. Maxim Integrated Products (MXIM) is currently trading at about $27 a share with analysts expecting EPS of $1.84 next year, an earnings increase of 23% y/y, for a forward P/E ratio of 14.8. NVIDIA (NVDA) is currently trading at about $12 a share with analysts expecting EPS of $0.91 next year, an earnings increase of 34% y/y, for a forward P/E ratio of 13.7. The mean forward P/E of Marvell Technology's competitors is 13.2 which suggests that Marvell Technology is undervalued relative to its publicly traded competitors.
Earnings Estimates: Marvell Technology has beat EPS estimates 3 times in the past 4 quarters. The company's EPS figures have come in between -1 cents and 3 cents from consensus estimates or about -3.3% to 16.7% from analyst estimates. The company has reported earnings that have differed from analyst estimates by a wide margin which suggests that the stock may experience upside from earnings surprises.
Price Action: Marvell Technology is down 7.2% over the past year, underperforming the S&P 500, which is up 3.5%. Looking at the technicals, the stock is currently below its 50 day moving average, which sits at $15.17 and below its 200 day moving average, which sits at $14.62.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.