What is MRVL's Intrinsic value?

Marvell Technology Group Ltd (MRVL) Intrinsic Value Analysis

Executive Summary

As of June 4, 2025, Marvell Technology Group Ltd's estimated intrinsic value ranges from $7.16 to $7.16 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $7.16 -88.5%

Is Marvell Technology Group Ltd (MRVL) undervalued or overvalued?

With the current market price at $62.36, the stock appears to be significantly overvalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Marvell Technology Group Ltd's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.99 1.19
Cost of equity 8.4% 11.6%
Cost of debt 4.7% 7.0%
Tax rate 13.5% 17.6%
Debt/Equity ratio 0.08 0.08
After-tax WACC 8.1% 11.1%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $873M
Discount Rate (WACC) 11.1% - 8.1%
Enterprise Value $7,841M - $10,753M
Net Debt $3,116M
Equity Value $4,726M - $7,638M
Outstanding Shares 864M
Fair Value $5 - $9
Selected Fair Value $7.16

Key Financial Metrics

Metric Value
Market Capitalization $53868M
Enterprise Value $56984M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 17.40
Current Dividend Yield 39.91%
Dividend Growth Rate (5Y) 6.62%
Debt-to-Equity Ratio 0.08

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $0.72
Weighted Average 100% $7.16

Investment Conclusion

Based on our comprehensive valuation analysis, Marvell Technology Group Ltd's weighted average intrinsic value is $7.16, which is approximately 88.5% below the current market price of $62.36.

Key investment considerations:

  • Strong projected earnings growth (-15% to 0% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.08)
  • Historical dividend growth of 6.62%

Given these factors, we believe Marvell Technology Group Ltd is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.