• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Here's How I'm Playing Marvell Technology Following Q2 Earnings

If you're in MRVL, you're here for the opportunity in 5G technology.
By STEPHEN GUILFOYLE
Aug 28, 2020 | 09:38 AM EDT
Stocks quotes in this article: MRVL, MU, WDC, STX, QCOM

A decent or even better than decent quarter it was for Marvell Technology (MRVL) . For the firm's fiscal second quarter, the firm posted an adjusted EPS of $0.21, which beat the street by a penny. Revenues landed at $727.29 million. That number also beat expectations, while being good enough for year over year growth of 10.8%. That rate of growth by the way, was the firm's best since Q4 2018. The firm also outpaced consensus opinion for margin. Adjusted gross margin of 63.3%, and adjusted operating margin of 22.4% both surprised to the upside.

Surprises Within

I don't know about everyone else, but I was mildly surprised by how sales were divided up for the quarter. Storage, which can be something of an industry in decline, especially for those firms still at least somewhat reliant upon HDD, and /or Flash, actually did well. That business line posted sales of $290 million, or just less than 40% of the entire pie. While growth of 5% sounds moderate, I was actually bracing myself for less.

Now, if you're in Marvell, you are here for the opportunity in 5G technology. You're not here for Storage. You can do Micron (MU) for a storage based approach, or Western Digital (WDC) for more focus on Flash. If you think the hard drive is set up for a return to the future, then you like Seagate Technology (STX) . However, if 5G is where you think you should be, the call has been MRVL, or maybe Qualcomm (QCOM) .

Networking, which is where in this firm's data we'll find 5G, put a cool $405 million in sales to the tape, growth of 23%, and nearly 57% of that already mentioned entire pie. Oh, I know this may seem out of place, but has anyone seen anything in the way of Strawberry Rhubarb pie of late? I know I have not. Random thought, never mind. I have a couple of "maybe" type problems with this performance in Networking. Yes, the number did beat consensus, but not by as much as I was hoping.

In addition, while the company sees growth in this unit, the driver of growth for the firm in 5G technology has come from inside China. That's a wildcard, or possibly a hot potato going into the election in my opinion. I believe this is why the firm's guidance is less than outstanding.

Looking Ahead

Moving right along, for the third quarter they now expect to see revenue land at roughly $750 million, which would be slightly below where Wall Street is for the firm. The firm looks for adjusted EPS of $0.22 to $0.28, which ballparks the $0.25 that the industry expects. However, the firm is also below the street on Q3 adjusted gross margin which was a strength for the Q2. Is my spider sense tingling? A little.

My thinking is that these shares are clearly extended from the mid-May breakout and have formed a basing pattern at the top of the chart that has been in place since early June. I think I make a sale on the Friday pop. Truth is I am up 41% on the name, and my target was 25%, so very likely I take the entire position off my screen and pad my cash position which has dwindled this summer.

(Marvell Technology is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells MRVL? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Stephen Guilfoyle was Long MRVL equity.

TAGS: Earnings | Investing | Stocks | Technical Analysis | Trading | Technology | Telecommunications

More from Investing

When it Comes Time to Sell, Will You Act or Will You Freeze?

James "Rev Shark" DePorre
Jan 16, 2021 10:00 AM EST

Why don't more people embrace the ease and power of selling stocks? Why do they freeze and do nothing as losses build?

Cybersecurity Stocks that Lagged in 2020 Could Get Boost from SolarWinds Hack

Eric Jhonsa
Jan 16, 2021 8:00 AM EST

The hack stands to drive an uptick in corporate and government spending to protect both on-premise and cloud assets.

Hungry Traders and Stock Opportunities Aren't Likely to Go Away Soon

James "Rev Shark" DePorre
Jan 15, 2021 4:40 PM EST

It doesn't take much time for stocks with strong momentum to reset and continue on their way.

At What Price Is Ballard Power Systems a Buy?

Bruce Kamich
Jan 15, 2021 3:09 PM EST

Let's check out the latest charts of BLDP.

United Parcel Service Is Testing Key Support

Bruce Kamich
Jan 15, 2021 2:30 PM EST

A look at the charts of UPS.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login