Marvell (MRVL) To Report Q2 Earnings: A Beat In The Cards?

We expect Marvell Technology Group Ltd. (NASDAQ:MRVL) to beat expectations when it reports second-quarter 2018 results on Aug 24.

Why a Likely Positive Surprise?

Our proven model shows that Marvell is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Marvell’s Earnings ESP is +1.46%. This is because the company’s Most Accurate estimate is 29 cents while the Zacks Consensus Estimate is pegged lower at 28 cents. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Marvell currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 has a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

The combination of Marvell’s Zacks Rank #3 and +1.46% ESP makes us reasonably optimistic of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Marvell Technology Group Ltd. Price and EPS Surprise

Marvell Technology Group Ltd. Price and EPS Surprise | Marvell Technology Group Ltd. Quote

What is Driving Better-than-Expected Earnings?

We note that Marvell has strong record of earnings surprises in the trailing four quarters, with an average surprise of 40.1%.

The company’s consecutive four quarters of better-than-expected bottom-line results have boosted investor’s confidence over the stock. Apart from this, an encouraging second-quarter fiscal 2018 outlook provided in the last quarterly earnings conference call also makes us hopeful about its near-term performance.

Furthermore, we believe that the strong demand for Marvell’s 4G LTE products is likely to be a catalyst. This will be supported by growth from the company’s wide range of newly-launched Internet of Things (IoT) solutions.

Going forward, the company’s current restructuring initiative will help Marvell improve cloud infrastructure and applications, which are expected to drive the top line. The latest buyback scheme also reflects its sound financial position and favorable prospects.

Stocks to Consider

Here are some companies you may consider as our proven model shows they too have the right combination of elements to post an earnings beat this quarter:

Intuit Inc. (NASDAQ:INTU) has an Earnings ESP of +4.47%. It carries a Zacks Rank #3.

HP Inc. (NYSE:HPQ) has a Zacks Rank #2 and an Earnings ESP of +1.59%.

Vmware, Inc. (NYSE:VMW) , with an Earnings ESP of +2.12%, carries a Zacks Rank #2.

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