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Is a Beat Likely for Marvell Technology (MRVL) in Q3 Earnings?

Marvell Technology MRVL is likely to beat expectations when it reports third-quarter fiscal 2024 results after market close on Nov 30.

For the fiscal third quarter, the company projects total revenues of $1.4 billion (+/- 5%). Marvell projects non-GAAP earnings per share for the fiscal third quarter to be approximately 40 cents (+/- 5 cents).

The Zacks Consensus Estimate for revenues is pegged at $1.40 billion, indicating a decrease of 8.9% from the year-ago quarter’s reported figure. The consensus mark for earnings is pegged at 40 cents per share, implying a year-over-year decrease of 29.8%.

Marvell’s earnings beat the Zacks Consensus Estimate twice in the trailing four quarters while matching once and missing on one occasion, the average surprise being 1.7%.

In the last reported financial results for the second quarter, the semiconductor company reported revenues of $1.34 billion, which surpassed the consensus mark of $1.33 billion. The top line was also higher than the midpoint of management’s guidance of $1.33 billion (+/- 5%).

Moreover, it reported non-GAAP earnings of 33 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 32 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-eps-surprise | Marvell Technology, Inc. Quote

Factors to Consider

Marvell’s third-quarter performance is likely to have been negatively impacted by softness in its product demand as original equipment manufacturers (OEMs) are rescheduling orders to manage excess chip inventories. As a result of broadening inventory corrections, MRVL’s revenues from its Data Center end market are likely to have declined year over year in the third quarter.

Our estimate for the Data Center division’s third-quarter revenues is pegged at $532.7 million, indicating a year-over-year decline of 15.1%. However, management anticipates overall Data Center revenues to grow in the mid-teen percentage range sequentially, primarily driven by continued strong growth from Cloud AI and the benefits of a low base in the storage sub-division.

Enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues, which is likely to have negatively impacted Marvell’s overall financial performance in the to-be-reported quarter. Moreover, continued inventory correction actions by customers are likely to have hurt the division’s overall performance.

The company had forecasted that overall Enterprise Networking revenues would decline sequentially in the low-teen percentage range. Our estimate for the segment’s third-quarter revenues is pegged at $290.4 million, indicating a year-over-year decline of 22.8%.

For the overall Carrier Infrastructure end market, we assume that revenues are likely to have increased year over year, primarily 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 increase in the low-single-digit percentage range sequentially. Our estimate suggests that the division’s third-quarter revenues will increase 3.8% year over year to $281.8 million.

Earnings Whispers

Our proven model predicts an earnings beat for Marvell this earnings 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, which is the case here.

Earnings ESP: Earnings ESP, which represents 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 carries a Zacks Rank #3.

Other Stocks With the Favorable Combination

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

Micron carries a Zacks Rank #3 and has an Earnings ESP of +26.69%. The company is scheduled to report first-quarter fiscal 2024 results on Dec 20. Its earnings surpassed the Zacks Consensus Estimate twice in the trailing four quarters while missing on two occasions, the average surprise being -67.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

Snowflake is slated to report third-quarter fiscal 2024 results on Nov 29. The company has a Zacks Rank #2 and an Earnings ESP of +67.33% at present. Snowflake’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 244.5%.

The Zacks Consensus Estimate for third-quarter earnings is pegged at 16 cents per share, suggesting an increase of 45.5% from the year-ago quarter’s earnings of 11 cents. Snowflake’s quarterly revenues are estimated to grow 27.6% year over year to $710.5 million.

Paychex carries a Zacks Rank #3 and has an Earnings ESP of +1.11%. The company is expected to report second-quarter fiscal 2024 results on Dec 28. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, with the average surprise being 2.3%.

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

Stay on top of upcoming earnings announcements with 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

Snowflake Inc. (SNOW) : Free Stock Analysis Report

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