Marvell Technology stock analysis. MRVL Stock.
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Marvell Technology is a fabless semiconductor company that creates products used in data centers, enterprise servers, the Internet of Things (IoT), smartphones, and storage systems.
The company went public in 2000 and until 2018, the return to shareholders – excluding dividends - was only 10%. That’s significantly worse than the S&P 500.
Since 2019, however, the stock has taken off gaining 300% and that’s because Marvel is directly benefiting from the boom in data centers and artificial intelligence. This can be seen in top line revenue which grew 50% in 2021 and another 33% last year.
At the current share price, Marvel has a market cap of 52 billion. It’s got 1 billion in cash and 3.2 billion of debt so the enterprise value is around 54 billion.
Revenue over the last 12 months is 5.8 billion with 1 billion in free cash flow. But net income is negative at minus 167 million.
That means Marvel stock is valued just over 9 times revenue and 54 times free cash flow.
Meanwhile, the company pays a dividend of 0.4% and has gross margins just over 48%
If we look at the company’s revenue mix, you can see that Marvel derives 38% of revenue from datacenters, 25% from enterprise networking, 19% from carriers, 11% from consumer products and 7% from automotive and industrial.
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Join our newsletter: https://www.overlookedalpha.com
Marvell Technology is a fabless semiconductor company that creates products used in data centers, enterprise servers, the Internet of Things (IoT), smartphones, and storage systems.
The company went public in 2000 and until 2018, the return to shareholders – excluding dividends - was only 10%. That’s significantly worse than the S&P 500.
Since 2019, however, the stock has taken off gaining 300% and that’s because Marvel is directly benefiting from the boom in data centers and artificial intelligence. This can be seen in top line revenue which grew 50% in 2021 and another 33% last year.
At the current share price, Marvel has a market cap of 52 billion. It’s got 1 billion in cash and 3.2 billion of debt so the enterprise value is around 54 billion.
Revenue over the last 12 months is 5.8 billion with 1 billion in free cash flow. But net income is negative at minus 167 million.
That means Marvel stock is valued just over 9 times revenue and 54 times free cash flow.
Meanwhile, the company pays a dividend of 0.4% and has gross margins just over 48%
If we look at the company’s revenue mix, you can see that Marvel derives 38% of revenue from datacenters, 25% from enterprise networking, 19% from carriers, 11% from consumer products and 7% from automotive and industrial.
#investing #stocks #stockstowatch #overlookedalpha
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NewsTranscript
00:00 Marvel Technology is a fabulous semiconductor company that creates products used in data
00:04 centers, enterprise servers, the internet of things, smartphones and storage systems.
00:10 The company went public in 2000 and until 2018 the return to shareholders excluding
00:15 dividends was only 10%, that's significantly worse than the S&P 500.
00:21 Since 2019 however the stock has taken off, gaining 300% and that's because Marvel is
00:26 directly benefiting from the boom in data centers and artificial intelligence.
00:31 This can be seen in top line revenue which grew 50% in 2021 and another 33% last year.
00:38 At the current share price Marvel has a market cap of $52 billion.
00:42 It's got $1 billion in cash and $3.2 billion of debt so the enterprise value is around
00:47 $54 billion.
00:48 Revenue over the last 12 months is $5.8 billion with $1 billion in free cash flow but net
00:53 income is negative at -$167 million.
00:57 That means Marvel's stock is valued just over 9 times revenue and 54 times free cash
01:02 flow.
01:03 Meanwhile, the company pays a dividend of 0.41% and has gross margins just over 48%.
01:09 If we look at the company's revenue mix you can see that Marvel derives 38% of revenue
01:14 from data centers, 25% from enterprise networking, 19% from carriers, 11% from consumer products
01:21 and 7% from automotive and industrial.
01:24 There's no doubt there are some fast growing markets in there and Marvel has benefited
01:28 from the recent boom in AI stocks.
01:31 However Marvel's exposure to AI isn't as large as you might think, at least not yet.
01:36 The company estimates its AI revenue to be only $200 million in 2023 which is less than
01:42 4% of total revenue.
01:44 And although the company thinks that it will grow to $800 million by 2025, there are no
01:48 shortage of semiconductor companies that will be competing for that same business.
01:53 Meanwhile Marvel's growth in AI may be balanced out by a slowdown in Marvel's wired communications
01:58 products.
02:00 Wired networking products are showing signs of terminal decline and those products make
02:04 up a large part of Marvel's revenue.
02:06 As well, the move into GPU based servers for AI could hurt demand for Marvel's CPU connectivity
02:12 ports.
02:14 As noted by Herb Greenberg on Twitter, Marvel barely mentioned AI in its conference calls
02:19 until the first quarter of 2023.
02:21 Now it's trying to cash in on the boom.
02:24 Overall there are no shortage of competitors in this space and the semiconductor industry
02:28 will remain a tough environment, driven by cycles.
02:32 The AI boom is huge but I think there are better positioned companies than Marvel Technology.
02:37 That's why I give the stock a neutral rating but these are my personal opinions, not financial
02:41 advice and I've got no position in the stock.