Will Marvell (MRVL) Beat Earnings Estimates? - Analyst Blog

Marvell Technology Group Ltd. MRVL is set to report first-quarter fiscal 2015 results on May 22. Last quarter, the company posted a positive earnings surprise of 22.2%. Let us see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Marvell delivered decent fourth-quarter results wherein both the top and bottom lines came ahead of the Zacks Consensus Estimate. Revenue contributions from the end markets were in line with expectations and also increased on a year-over-year basis. Improvement in revenues was primarily due to steady performance from the storage and networking business, which more than offset the seasonal decline in the wireless business.

The company expects mobile and wireless end markets to grow, driven by a ramp up in its unified 3G platform for mobile and advanced wireless connectivity solutions. Additionally, the strong demand for Marvell's 4GLTE products could be the growth driver in the forthcoming quarters. We also remain positive on Marvell's diverse revenue base and stable balance sheet.

However, competition in the semiconductor market from major players such as Intel Corp. INTC and Texas Instruments Inc. TXN remains a headwind. Moreover, sluggish macroeconomic conditions, a shrinking PC market, the impending damage payment and higher material costs are the other challenges in the near term.

Earnings Whispers?

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

Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 15 cents. Hence, the difference is 0.00%.

Zacks Rank: Marvell carries a Zacks Rank #2 (Buy). Though Zacks Ranks #1, 2 or 3 increase the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

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

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

• BlackBerry Ltd. BBRY has an Earnings ESP of +14.29% and holds a Zacks Rank #2
• Infinera Corp. INFN, Earnings ESP of +33.33% and a Zacks Rank #2
• Best Buy Co., Inc. BBY, Earnings ESP of +5.00% and a Zacks Rank #3 (Hold)