Returns Are Gaining Momentum At Marvell Technology (NASDAQ:MRVL)

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Amongst other things, we’ll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company’s amount of capital employed. Put simply, these types of businesses are compounding machines, meaning they are continually reinvesting their earnings at ever-higher rates of return. So on that note, Marvell Technology (NASDAQ:MRVL) looks quite promising in regards to its trends of return on capital.

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Just to clarify if you’re unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. To calculate this metric for Marvell Technology, this is the formula:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

0.061 = US$1.1b ÷ (US$22b – US$2.7b) (Based on the trailing twelve months to November 2025).

Therefore, Marvell Technology has an ROCE of 6.1%. In absolute terms, that’s a low return and it also under-performs the Semiconductor industry average of 8.9%.

Check out our latest analysis for Marvell Technology

Above you can see how the current ROCE for Marvell Technology compares to its prior returns on capital, but there’s only so much you can tell from the past. If you’d like, you can check out the forecasts from the analysts covering Marvell Technology for free.

The fact that Marvell Technology is now generating some pre-tax profits from its prior investments is very encouraging. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 6.1% on its capital. In addition to that, Marvell Technology is employing 95% more capital than previously which is expected of a company that’s trying to break into profitability. This can tell us that the company has plenty of reinvestment opportunities that are able to generate higher returns.

In summary, it’s great to see that Marvell Technology has managed to break into profitability and is continuing to reinvest in its business. Since the stock has returned a solid 90% to shareholders over the last five years, it’s fair to say investors are beginning to recognize these changes. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

Marvell Technology does have some risks though, and we’ve spotted 1 warning sign for Marvell Technology that you might be interested in.

While Marvell Technology isn’t earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.

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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.