DCF Studio

    MRVL · NMS · Technology

    Marvell Technology, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 14.53

    Market price

    USD 244.25

    Implied upside

    -94.1%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis model values the shares at 5.9% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.

    Current EV/EBITDA of 84.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 14.53-94.1%
    Exit multiple
    USD 47.32-80.6%
    Market price
    USD 244.25

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 9.1bnUSD 10.2bnUSD 11.3bnUSD 12.6bnUSD 14.1bn+11.4%
    EBITUSD 185.6mUSD 206.8mUSD 230.5mUSD 256.9mUSD 286.3m+11.4%
    NOPATUSD 146.6mUSD 163.4mUSD 182.1mUSD 202.9mUSD 226.2m+11.4%
    Add depreciation & amortisationUSD 2.0bnUSD 2.2bnUSD 2.5bnUSD 2.8bnUSD 3.1bn+11.4%
    Less capital expenditureUSD -444.3mUSD -495.2mUSD -551.9mUSD -615.1mUSD -685.5m+11.4%
    Less increase in working capitalUSD -131.7mUSD -146.7mUSD -163.5mUSD -182.3mUSD -203.1m+11.4%
    Free cashflow to firmUSD 1.6bnUSD 1.8bnUSD 2.0bnUSD 2.2bnUSD 2.4bn+11.4%
    Discount factor0.93300.81220.70700.61540.5357-
    Present valueUSD 1.5bnUSD 1.4bnUSD 1.4bnUSD 1.3bnUSD 1.3bn-3.0%
    Present Value Of The ForecastUSD 7.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.840Reported 2.253, pulled toward 1.0 (Blume)
    Cost of equity15.12%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 219.5bn97.9% of capital
    Total debtUSD 4.8bn2.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC14.88%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 14.53

    53% of EV

    Forecast FCFF, final year
    USD 2.4bn
    Capex at depreciation, working capital in reinvestment
    USD 2.1bn
    Less reinvestment at g/ROIC (16.8% of NOPAT)
    USD -356.2m
    Capitalised
    USD 1.8bn
    ROIC (WACC floor)
    14.9%
    Terminal value, undiscounted
    USD 14.6bn
    Terminal value, discounted
    USD 7.8bn
    Enterprise value
    USD 14.8bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 12.6bn

    Exit at 20.0x EBITDA

    Value per shareUSD 47.32

    84% of EV

    Terminal value, undiscounted
    USD 67.8bn
    Terminal value, discounted
    USD 36.3bn
    Enterprise value
    USD 43.3bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 41.2bn

    Spread between methods: 106%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    12.88%17.0217.0817.1317.1917.24
    13.88%15.6415.6915.7415.7815.83
    14.88%14.4414.4814.5314.5714.61
    15.88%13.3913.4313.4713.5113.55
    16.88%12.4712.5012.5412.5812.61

    Outlined: this model. Green text: above today's price of 244.25. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Discount rate14.9%2.8%-12.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.