Marvell Technology Stock At 20% Discount, Worth Buying?

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Marvell Technology (MRVL) stock warrants your attention. Why? Because you receive high cash flow margins at a discounted price. Here are some details. Revenue Growth: Marvell Technology experienced a growth of 37.1% LTM and a 10.9% average over the last 3 years. Recent Profitability: Roughly 25.5% operating cash flow margin and 6.0% operating margin LTM. Long-Term Profitability: Approximately 25.5% operating cash flow margin and -1.3% operating margin over the last 3 years on average. Available At Discount: With a P/S multiple of 10.5, MRVL stock is currently priced at a 19% discount compared to a year ago. Signage with logo at the Silicon Valley headquarters of semiconductor company Marvell, Santa Clara, California, August 17, 2017. (Photo via Smith Collection/Gado/Getty Images). Getty Images While revenue growth is beneficial, this is not purely a growth viewpoint. Pricing power along with high margins leads to steady and foreseeable profits and cash flows, which mitigates risk and permits capital reinvestment. The market tends to favor that. While Marvell stock has been weighed down by lumpy orders and customers-end delays for chips, there are signs that the company could be building a niche for itself in AI infrastructure. AI landscape could move from heavy, centralized model training to continuous inference, which is essentially running the models, across millions of devices and applications. This change favors Marvell’s expertise in designing specialized, power-efficient chips compared to the high-end GPUs used for training. For some background, Marvell Technology develops analog, mixed-signal, and digital integrated circuits, as well as Ethernet solutions and storage controllers for both hard drives and solid-state drives that support various host system interfaces. MORE FOR YOU However, do these figures tell the entire story? Read Buy or Sell MRVL Stock to determine if Marvell Technology retains a competitive advantage upon further scrutiny. Markets fluctuate. Quality endures. Discover how High Quality Portfolio remains balanced. Stocks Like These Can Outperform. Here Is Data We select stocks that exceed $10 Billion in market capitalization and filter based on high CFO (cash flow from operations) margins or operating margins. We also focus on those stocks that have substantially decreased in value over the previous year. Below are the statistics for stocks with this selection strategy applied since 12/31/2016. Average 12-month forward returns of nearly 19% 12-month win rate (the percentage of picks that yield positive returns) of about 72% But Consider The Risk While Marvell may seem strong, it is not immune to crashes. It dropped 92% during the Dot-Com bubble and nearly 77% throughout the Global Financial Crisis. The 2022 inflation surge affected it by about 62%. Even smaller declines — the 2018 correction and the Covid pandemic — saw it drop close to 40%. Certainly, it shows strong fundamentals, but when the market shifts, steep declines are part of the process. Nevertheless, the risk is not confined to major market downturns. Stocks can decline even during favorable market conditions — consider events like earnings announcements, business updates, or changes in outlook. Read MRVL Dip Buyer Analyses to learn how the stock has bounced back from significant dips in the past. The Trefis High Quality (HQ) Portfolio, comprising a collection of 30 stocks, has consistently outperformed its benchmark, which includes all three indices — the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? Collectively, HQ Portfolio stocks have offered better returns with reduced risk compared to the benchmark index; presenting a smoother investment experience, as demonstrated in HQ Portfolio performance metrics. Editorial StandardsReprints & Permissions