Cavium (CAVM) and Marvell Technology Group (MRVL) Critical Analysis

Cavium (NASDAQ: CAVM) and Marvell Technology Group (NASDAQ:MRVL) are both mid-cap computer and technology companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Dividends

Marvell Technology Group pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. Cavium does not pay a dividend. Marvell Technology Group pays out 31.2% of its earnings in the form of a dividend.

Risk and Volatility

Cavium has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500. Comparatively, Marvell Technology Group has a beta of 1.13, indicating that its stock price is 13% more volatile than the S&P 500.

Profitability

This table compares Cavium and Marvell Technology Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cavium -19.94% 11.16% 5.23%
Marvell Technology Group 16.53% 11.93% 10.31%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Cavium and Marvell Technology Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cavium 0 9 9 0 2.50
Marvell Technology Group 0 7 16 0 2.70

Cavium presently has a consensus target price of $78.56, indicating a potential downside of 8.38%. Marvell Technology Group has a consensus target price of $24.15, indicating a potential upside of 8.83%. Given Marvell Technology Group’s stronger consensus rating and higher possible upside, analysts plainly believe Marvell Technology Group is more favorable than Cavium.

Institutional & Insider Ownership

78.8% of Marvell Technology Group shares are held by institutional investors. 4.7% of Cavium shares are held by insiders. Comparatively, 6.8% of Marvell Technology Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Cavium and Marvell Technology Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cavium $603.31 million 9.83 -$147.20 million ($2.82) -30.41
Marvell Technology Group $2.32 billion 4.70 $21.15 million $0.77 28.82

Marvell Technology Group has higher revenue and earnings than Cavium. Cavium is trading at a lower price-to-earnings ratio than Marvell Technology Group, indicating that it is currently the more affordable of the two stocks.

Summary

Marvell Technology Group beats Cavium on 12 of the 16 factors compared between the two stocks.

Cavium Company Profile

Cavium, Inc. is a provider of integrated semiconductor processors that enable intelligent processing for wired and wireless infrastructure and cloud for networking, communications, storage and security applications. The Company’s products consist of multi-core processors for embedded and data center applications, network connectivity for server and switches, storage connectivity, and security processors for offload and appliance. A range of its products also include a suite of embedded security protocols that enable unified threat management (UTM), secure connectivity, network perimeter protection and deep packet inspection (DPI). The Company sells its products to networking original equipment manufacturers (OEM), which sell into the enterprise, datacenter, service provider, and broadband and consumer markets. In the enterprise market, its products are used in routers, switches, storage appliances, server connectivity for networking and storage, wireless local area networks and UTM.

Marvell Technology Group Company Profile

Marvell Technology Group Ltd. is a semiconductor provider of application-specific standard products. The Company is engaged in the design, development and sale of integrated circuits. The Company develops System-on-a-Chip (SoC) devices. It also develops integrated hardware platforms along with software that incorporates digital computing technologies designed and configured to provide an optimized computing solution. Its product portfolio includes devices for storage, networking and connectivity. In storage, it is engaged in data storage controller solutions spanning consumer, mobile, desktop and enterprise markets. Its storage solutions enable customers to engineer products for hard disk drives and solid state drives. Its networking products address end markets in cloud, enterprise, small and medium business and service provider networks. The Company’s connectivity products address end markets in consumer, enterprise, desktop, service provider networks and automotive.

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