For investors looking to balance the search for high-growth companies with attention to price, the "Growth at a Reasonable Price" (GARP) method offers a practical middle path. This method tries to find companies with strong and lasting growth paths that are not completely seen in their current stock prices, thus sidestepping the very high prices often linked to the most popular growth stocks. One useful way to apply this method is through organized filtering, like the "Affordable Growth" filter, which looks for stocks with good growth scores, acceptable basic profit and financial condition, and prices that are not too high. A recent name found by this filter is Marvell Technology Inc (NASDAQ:MRVL).
A Close Look at Marvell's Basic Profile
A check of Marvell’s detailed basic analysis report shows a varied but hopeful situation, especially for an investor centered on affordable growth. The company’s total basic score of 6 out of 10 is held up by high marks in growth, helped by acceptable scores in price, profit, and condition.
Strong Growth Path
The most persuasive point for MRVL under a GARP view is its strong growth score of 9 out of 10. The company is showing good movement in both its recent results and its expected path ahead.
- Past Results: Revenue jumped by almost 45% over the past year, while Earnings Per Share (EPS) increased by over 85%. This is not a single event; the company has kept a good average yearly revenue increase of 16.4% and EPS increase of nearly 19% over recent years.
- Future Outlook: Analyst projections suggest a quickening of this path. Revenue is expected to grow at an average yearly rate of almost 25%, with EPS forecast to rise by about 42% each year. This expected quickening is a main good sign for growth investors.
For the affordable growth method, this good and quickening growth picture is the main driver. The method looks for companies where such growth is the source of future gains, making MRVL a solid choice on this point.
Price Considerations
With a price score of 6, MRVL offers a detailed case. On a simple view, some measures seem high,a Price-to-Earnings (P/E) ratio of 27.82 and a Forward P/E of 20.20. However, the GARP method stresses context. When measured against similar companies in the semiconductor field, MRVL’s price becomes more interesting.
- Its P/E ratio is lower than 84% of its field peers.
- Its Forward P/E is lower than 86% of the field.
- Importantly, when growth is considered using the PEG ratio, the price looks "fairly low," as per the analysis.
This relative price is key to the affordable growth idea. The filter specifically seeks stocks that are "not overpriced," and MRVL’s price, while not a bargain, seems fair relative to its strong growth outlook and its field, avoiding the too-high cost that can hurt gains.
Supporting Basics: Profit and Condition
A simple growth case can be uncertain if not backed by stable operations and a good financial position. The affordable growth filter needs fair scores in profit and condition (both at 5 for MRVL) to give that support.
- Profit (Score: 5): Marvell shows good margins, with a Profit Margin of 31.75% that beats 91% of the field. Its Return on Equity (17.60%) and Return on Assets (11.47%) are also with the best in its area. However, the score is balanced by a past of negative net income in earlier years, though recent reports show a clear positive change.
- Financial Condition (Score: 5): The company’s financial position shows both positives and points to note. Ability to pay is a clear positive, with a sound Altman-Z score showing no failure risk and an acceptable Debt-to-Equity ratio of 0.28. Cash measures like the Current and Quick ratios, however, are lower than many field peers. The report also states that the company’s Return on Invested Capital is now under its cost of capital, an area for possible gain.
These average but acceptable scores in profit and condition are important filters for the method. They help make sure the found growth is not happening on a weak financial base, adding a level of risk control to the growth search.
Summary and Next Steps
Marvell Technology Inc shows an interesting picture for investors using an affordable growth or GARP method. The company’s main positive is its good and quickening growth in both revenue and earnings, which fits the central need of the filter. This growth is seen alongside a price that, while not low on a simple view, seems fair relative to its field and its growth speed. The supporting basics in profit and condition, while not outstanding, give enough of a base to suggest the growth can continue.
It is key to remember that the semiconductor field changes and is competitive, and MRVL’s past profit has been uneven. Investors should think about these points next to the strong growth story.
For investors wanting to see other companies that match this mix of growth, price, and basic strength, more results can be seen using the Affordable Growth filter.
Disclaimer: This article is for information only and is not financial advice, a suggestion to buy or sell any security, or a support of any investment method. The information given is based on supplied data and should not be the only ground for an investment choice. Investors should do their own complete research and think about their personal money situation and risk comfort before making any investment.
