What's Common Between MRVL, MFSF, MAS & MAR?

On the face of it, there’s not much in common since Marvel (NASDAQ:MRVL) is a semiconductor company, MutualFirst (NASDAQ:MFSF) a banking company, Masco (NYSE:MAS) a building products company and Mariott (NASDAQ:MAR) a hospitality company.

But all these companies have a Zacks Rank #1, which makes them strong buys according to our tried and tested system. So let’s take a closer look at them-

Marvel Technology Group (MRVL)

Marvell Technology is a leading designer, developer and supplier of mixed-signal and digital signal processing integrated circuits for high-speed, high-density, digital data storage and broadband digital data networking markets. The company's goal is to continue to support its customers in providing faster, better solutions to meet their customers' needs for increased bandwidth as communication solutions evolve. The company meets this goal with state-of-the-art chip solutions that enable data transfer in data storage devices and networking applications.

Marvel’s 5-year history isn’t attractive, but the company is on the cusp of a turnaround because of internal restructuring and attractive new products for the SSD storage and IoT markets. This has led to better than expected results in the last few quarters as well as upwards revision to estimates:

Average 4-quarter EPS surprise 86.70%

In last 30 days fiscal 2018 earnings estimate up 10.84%, 2019 up 10.20%

PEG 1.21 compared to industry PEG of 1.93

MutualFirst Financial (MFSF)

MutualFirst Financial is the bank holding company of MutualBank, which offers financial services through approximately 30 full service retail financial center offices in Allen, Delaware, Elkhart, Grant, Kosciusko, Randolph, Saint Joseph and Wabash counties in Indiana. MutualBank also has trust offices in Carmel and Crawfordsville, Indiana and a loan origination office in New Buffalo, Michigan.

Through its subsidiary, Summit Mortgage, it operates a mortgage banking firm in Fort Wayne, Indiana. It also originates residential mortgage and commercial loans. Through its wealth management and brokerage divisions MutualWealth and MutualFinancial Advisors it provides a range of fee-based financial services, such as trust, investment, insurance, broker advisory, retirement plan and private banking services.

The last five years have seen the company growing both revenue and earnings before non-recurring items with good cost control, a focus on operating investments and a more or less steady share count. Long term debt has been rising however, along with interest expenses. This hasn’t had too much impact on earnings which continue to surprise or estimates that remain on an upward trajectory:

Average 4-quarter EPS surprise 20.98%

In last 30 days fiscal 2017 earnings estimate up 3.51%, 2018 up 5.06%

Masco Corporation (MAS)

Masco Corporation designs, manufactures, markets and distributes branded home improvement and building products. It has four business segments including Plumbing Products, Decorative Architectural Products, Cabinetry Products, and Windows and Other Specialty Products.

Some of the better-known brands include BEHR paint, DELTA and HANSGROHE faucets, bath and shower fixtures; KRAFTMAID and MERILLAT cabinets; MILGARD windows and doors, and HOT SPRING spas. It also produces architectural coatings, including paints, primers, specialty paints, stains and waterproofing products. It also offers value-priced, stock and semi-custom assembled cabinetry for kitchen, bath, storage, home office and home entertainment applications.

Given its product offerings, Masco’s results naturally bear a strong correlation to the health of the housing market. The housing market did moderately well in 2016 and is expected to remain steady this year as demand continues to outpace supply with millennials entering the market. This will keep prices on the rise although at a slower rate (as supply is expected to improve somewhat). This is good news for a company like Masco. This, along with the company’s restructuring/realignment initiatives may be expected to generate a positive impact on results.

The company has been disciplined in its approach, generating steady earnings growth in the last five years, although revenue varied widely. This was possible because of cost containment, disciplined opex and by a reduction in the share count. The leaner operating structure coupled with improvement in its primary served market should be positive for Masco this year. Here are some attractive numbers:

Average 4-quarter EPS surprise 3.53%

In last 60 days fiscal 2017 earnings estimate up 5.37%, 2018 up 4.33%

PEG 1.18 compared to industry PEG of 1.31

Mariott International (MAR)

Marriott International operates and franchises hotels under the Marriott, JW Marriott, The Ritz-Carlton, Renaissance, Residence Inn, Courtyard, TownePlace Suites, Fairfield Inn, SpringHill Suites and Ramada International brand names; develops and operates vacation ownership resorts under the Marriott Vacation Club International, Horizons, The Ritz-Carlton Club and Marriott Grand Residence Club brands; operates Marriott Executive Apartments; provides furnished corporate housing through its Marriott ExecuStay division; and operates conference centers.

After acquiring Starwood Hotels & Resorts in September last year, Mariott is now the largest hotel brand in the world. While the acquisition resulted in a huge debt balance, the company has a good track record of rising revenue, profits and earnings before non-recurring items over the last five years. So disciplined operations, international expansion and rising cash flows will enable the company to gradually reduce leverage:

Average 4-quarter EPS surprise 5.21%

In last 30 days fiscal 2017 earnings estimate up 3.32%, 2018 up 4.51%

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