Marvell Posts Upbeat Q4 Results, Provides Impressive Projections

Marvell Technology, Inc. (NASDAQ: MRVL) has reported better-than-expected results for the fourth quarter of Fiscal Year 2022 (ended January 29, 2022). The company’s earnings surpassed the consensus estimate by 4.2% and revenues exceeded the same by 1.5%.

In addition to upbeat results, solid top-line and bottom-line comparisons with the year-ago quarter, margin expansion, and healthy projections were the main highlights of the release. Despite this, shares of Marvell declined 2.2% in the extended trading hours on Thursday, closing at $63.75.

Marvell is one of the leading providers of infrastructure semiconductor solutions. It offers network adapters, serial advanced technology attachment, controllers, and other products. It is headquartered in Wilmington, DE.

Quarterly Highlights

Marvell reported adjusted earnings of $0.50 per share, above the consensus estimate of $0.48. Also, the bottom line increased 72.4% from the year-ago reported figure of $0.29 per share. Healthy sales growth and margin expansion supported the improvement in earnings.

Quarterly revenues stood at $1.34 billion, above the Street’s estimate of $1.32 billion. On a year-over-year basis, the top line increased 68.3% on the back of healthy growth in all end markets.

The company’s revenues grew (compared with the year-ago quarter) in all end markets, with the growth of 113% recorded in data center, 45% in carrier infrastructure, 64% in enterprise networking, 11% in consumer, and 134% in automotive and industrial markets. Interestingly, the largest share of the quarterly revenues came from data center (43% of the fourth-quarter revenue), followed by enterprise networking (19%) and carrier infrastructure (18%).

The company’s cost of sales increased 74.3% from the year-ago quarter. Adjusted gross profit in the quarter was $0.88 billion, up 72.1% year-over-year, while gross margin at 65.3% rose 140 basis points (bps).

Operating expenses (adjusted) expanded 37.6% year-over-year in the quarter. Adjusted operating margin was 36.3%, up 790 bps from the year-ago quarter.

Annual Highlights

In Fiscal Year 2022, Marvell’s adjusted earnings were $1.57 per share, reflecting an increase of 70.7% from the previous year. Revenues stood at $4.46 billion, up 50.3% year-over-year.

Exiting the fiscal fourth quarter, Marvell’s cash and cash equivalents stood at $0.61 billion, down 18% year-over-year. Long-term debt at $4.48 billion reflected a huge increase from $0.99 billion at the end of the previous year.

In Fiscal Year 2022, the company’s net cash flow from operating activities was $0.82 billion, up 0.3% year-over-year, while capital expenditure grew 58.5% to $0.17 billion.

Projections for Q1 Fiscal Year 2023

For the first quarter of the Fiscal Year 2023 (ending April 2022), Marvell anticipates revenues to be $1.425 billion (+/-3%). Adjusted earnings per share are predicted to be within the $0.48-$0.54 range, with the mid-point being $0.51 per share.

Adjusted gross margin is expected to be within the 65%-66% range in the quarter and adjusted operating expenses are predicted to vary from $430 million to $435 million.

Capital Deployment

During Fiscal Year 2022, Marvell used $3.55 billion on acquisitions (net of cash acquired) and $0.53 billion for repaying the principal amount of debts.  

It also paid a dividend of $0.19 billion during the year, up 19% year-over-year, while refrained from repurchasing any shares. However, the company bought back shares worth $0.03 billion in the Fiscal Year 2021.

A day before releasing its results, Marvell announced that a quarterly dividend of $0.06 per share will be paid on April 27 to shareholders of record as of April 8.

Analysts’ Take

Recently, an analyst at Rosenblatt Securities, Hans Mosesmann, reiterated a Buy rating on Marvell with the price target set at $120 (84.05% upside potential).

The Street is optimistic on Marvell and has a Strong Buy consensus rating based on 9 Buys and 2 Holds. The average Marvell price target is $103.20, suggesting 58.28% upside potential from current levels. Over the past year, shares of Marvell have surged 63.2%.

Bloggers Opinion

Per TipRanks data, the financial blogger opinions are 85% Bullish on MRVL, compared with the sector’s average of 68%.

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