Marvell Technology Group Ltd (NASDAQ:MRVL) received a lot of attention from a substantial price movement on the NasdaqGS over the last few months, increasing to $24.37 at one point, and dropping to the lows of $20.06. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Marvell Technology Group’s current trading price of $20.32 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Marvell Technology Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Marvell Technology Group
Is Marvell Technology Group still cheap?
Marvell Technology Group appears to be overvalued by 30% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$20.32 on the market compared to my intrinsic value of $15.67. This means that the buying opportunity has probably disappeared for now. In addition to this, it seems like Marvell Technology Group’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to fall back down to an attractive buying range, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.
What does the future of Marvell Technology Group look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 75.91% over the next couple of years, the future seems bright for Marvell Technology Group. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in MRVL’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe MRVL should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on MRVL for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for MRVL, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Marvell Technology Group. You can find everything you need to know about Marvell Technology Group in the latest infographic research report. If you are no longer interested in Marvell Technology Group, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.