Shares of Marvell Technology Group (NASDAQ: MRVL) gained 15.1% in August, according to data from S&P Global Market Intelligence. The surge was driven by a stellar second-quarter earnings report, and the stock has now soared 43% higher over the past 52 weeks.
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The maker of storage and networking controller chips saw sales rising 1% year over year in the second quarter, stopping at $605 million. On the bottom line, adjusted earnings jumped 67% higher to land at $0.30 per share. Analysts were only looking for earnings of $0.28 per share on revenues near $601 million. Share prices rose more than 10% higher the next day and haven't looked back since then.
Marvell is emerging from a legacy cocoon of hard drive controller sales and legacy networking orders into a new business model where SSD storage devices and high-speed networking are driving the truck. The shifting product mix is widening Marvell's gross margins with cascading benefits further down the income statement. Management is paying special attention to Chinese storage and networking customers at the moment, but North American clients have also been holding their own.
In short, Marvell is defending its market positions in the storage and networking sectors while also building future growth in the budding automotive computing industry. As long as management continues to execute, I find it easy to endorse Marvell's stock even after a strong bull rush like the current surge. This stock is going places in the long run.
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