Marvell Technology Group Ltd. (MRVL)’s Market Abilities

Qualcomm is a much larger company than Marvell, with a market cap of around $115 billion. The company develops technology equipment using its advanced broadband technology, and makes a lot of its money from licensing and royalty fees. Qualcomm trades at 18.2 times TTM earnings, which is comparable to Marvell. The consensus calls for a 12% forward earnings growth rate, and Qualcomm has a very nice net cash position (about $12.4 billion), although it is less than Marvell’s on a percentage of market cap basis.

STMicroelectronics, which is based in Switzerland, is more comparable in size and product offerings to Marvell, and it doesn’t look like a better value. A P/E analysis is meaningless since the company lost money last year, and is expected to just break even for 2013. Earnings are expected to rebound nicely to $0.69 and $0.93 per share in 2014 and 2015, respectively, but this company seems to be more of a possible turnaround story than a long-term investment prospect.

A Steal or a Trap?

Of the three companies mentioned here, Marvell certainly seems like a good deal, especially if they are able to deliver on the ambitious earnings numbers that are expected. With all the makings of a stable long-term investment (decent dividend yield, lots of cash, growing revenues), I feel confident in calling Marvell a buy right here and now.

The article A Bargain in the Semiconductor Sector originally appeared on Fool.com and is written by Matthew Frankel.

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