Earnings season is starting to look a bit long in the tooth, but we've still got some companies left in the queue with a little bite to 'em. Tomorrow, Marvell Technology
After the news comes out, we'll have time aplenty to dissect it. But in these few hours before we begin obsessing over Marvell's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 28,000 rated investors for their views on more than 4,000 companies, Marvell among them. Here's what Fools have to say about the company.
Up or down?
Nearly 800 investors have submitted ratings on Marvell. Their verdict: You guessed it -- Marvell-ous.
Among the CAPS population at large, Marvell gets the thumbs-up from 95% of investors. Within the elite subgroup of All-Star investors, that approval rating drops only a couple of points, to 93%. Combined, that's good enough to earn the firm a respectable four CAPS stars out of a possible five.
Within its CAPS peer group, Marvell is tied for top o' the heap:
|
Integrated Circuits Semiconductor Group |
|
|---|---|
|
QLogic |
***** |
|
Marvell |
***** |
|
Omnivision Technologies |
*** |
|
RF Micro Devices |
** |
|
PMC-Sierra |
** |
|
Broadcom |
** |
|
Magma Design |
** |
Wall Street vs. Main Street
Wall Street begs to differ. The people who know investing best (or so they tell us) have far more mixed feelings about the likelihood of Marvell's success, with only seven out of the 10 Marvell-watching analysts we track giving the firm the thumbs-up. Little wonder that they're jaded. Over the past 52 weeks, Marvell has underperformed the S&P 500 by a very un-Marvell-ous 49 percentage points.
Bull pitch
The top-rated pitch from the pro-Marvell camp on CAPS goes something like this:
Based on Value Line's Cash-Flow-multiple-based "fair value" estimate, [Marvell is] worth roughly $33.60 (32 x $1.05 Cash Flow) and [its] PE:Growth ratio is below 1.0. I see a margin of safety here, and I'm taking advantage. Are you in? Management is. They own almost 20% of outstanding shares.
Bear pitch
Most of the bull theses posted on CAPS seem to hang their hats on the horn of Marvell's role in the stock-options backdating scandal. But considering the breadth of the practice across corporate America, and the notable absence of daily headlines describing firms getting delisted as a result of their role in the debacle, I suspect that one's a red herring. A better bearish argument might read:
Marvell's expected 24% growth rate doesn't justify its current P/E of 31. Moreover, the firm's net income under GAAP overstates its true cash profitability (free cash flow). Thus, the firm's price-to-free cash flow ratio is an even richer 36x, meaning that this stock is even more expensive than it appears at first GAAP-glance.
Who said that?
To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, just click here.
And if you're interested in a couple of semiconductor ideas, pick up a free copy of Motley Fool Stock Advisor on your way out. We've identified a handful of prospects for our members, and considering that our picks outperform the S&P 500 by about 36% on average, you might want to take a look.
Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 1,274 out of nearly 29,000 rated players.
