The Price-to-Sales (P/S) ratio is the preferred multiple for valuing Marvell Technology because it offers a straightforward way to assess how much investors are willing to pay for every dollar of the company’s sales. This metric is especially useful for companies like Marvell that may have uneven or negative earnings but generate significant revenue and operate in rapidly growing sectors such as semiconductors.

While the long-term growth prospects and risk profile of a company should influence what counts as a “fair” P/S ratio, industry and peer benchmarks are often used as a starting point. Currently, Marvell trades at a P/S ratio of 9.23x. For comparison, the semiconductor industry average P/S is 4.24x, and its peers in the sector average a higher 15.59x. On its own, Marvell’s P/S may seem elevated relative to the broader industry but is below the peer group average, reflecting moderate expectations for the company’s growth and profitability.

This is where Simply Wall St’s “Fair Ratio” comes in. The Fair Ratio for Marvell is calculated as 11.30x, which represents what would be considered a reasonable P/S for the company, factoring in its revenue growth, risk profile, industry standards, and market capitalization. Unlike a simple industry or peer comparison, the Fair Ratio is tailored to the realities of Marvell’s business drivers and provides a more comprehensive view of value.

Comparing Marvell’s current P/S of 9.23x to its Fair Ratio of 11.30x shows the stock is trading at a slight discount, indicating it is potentially undervalued based on this analysis.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1430 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives.

A Narrative is simply your story or perspective about a company’s future. It links your expectations about key drivers like revenue, earnings, and margins to your own estimate of fair value. Instead of just crunching numbers, Narratives help you connect the dots between what’s happening in the business, what you believe will happen next, and what that means for whether the stock looks cheap or expensive today.

On Simply Wall St’s Community page, Narratives are easy to create and use. This lets anyone, not just professional analysts, turn their research and opinions into actionable forecasts and fair value estimates. Millions of investors are already using this tool to guide their decisions.

Your Narrative is kept up to date in real time as new news, earnings, or data is released, so you can always track whether your thesis still stacks up or needs a rethink. Narratives make it clear whether your fair value is above or below the current price, empowering you to decide when you believe it’s the right time to buy, hold, or sell.

For example, some investors expect Marvell Technology’s earnings to surge with AI infrastructure demand and assign a fair value as high as $122, while others are more cautious, projecting $58 if growth stalls or risks materialize.

Do you think there’s more to the story for Marvell Technology? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MRVL.

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