In the past 30 days, eight analysts have raised their earnings estimates for this tech company.
Zebra Technologies Corporation (ZBRA)
From Dow Theory Forecasts
Several megatrends are shaping the future of business globally—the internet of things (IOT), cloud computing, big data, mobility, intelligent automation, and the “on-demand” economy.
At the intersection of these trends is Zebra Technologies Corporation (ZBRA).
The company delivers end-to-end solutions that connect people, corporate assets, and data to help customers make better business decisions. Zebra’s corporate name makes a lot of sense when you consider the company’s legacy business—bar-coding. The fi rm is a leader in this space and has produced a number of firsts: the first handheld laser barcode scanner (1980), the first barcode printer (1982), the first thermal printer for on-demand barcode labeling (1986), etc. The company has expanded its product-identification business over the years to include radio-frequency identification (RFID) products and printers.
Overall, the company holds the No. 1 market position in mobile computing, data capture, barcode printing, and mobile RFID. The fi rm’s products serve a host of industries, from health
care (the company’s fastest-growing vertical) to transportation/logistics to retail/ecommerce to manufacturing.
The company increased its 2019 sales and profit outlook, based on the solid start to the year and the February acquisition of Temptime Corp. Temptime makes time-temperature indicators for temperature-sensitive vaccines, pharmaceuticals, and medical devices. For the second quarter of 2019,
Zebra expects net sales to increase 7% to 9% and per-share profits to rise 13% to 19% to $2.80 to $2.95, versus the consensus of $2.90. It’s worth noting that Zebra has beaten consensus sales and earnings targets in each of the last 10 quarters.
The company has put up strong growth numbers over the last five years, with per-share profits rising more than fourfold and sales increasing 152%. Record profits and sales are expected this year and next.
The stock has been volatile in recent months, partly as a result of the China-U.S. trade war — the fi rm imports a “significant” percentage of products into U.S. and China. Also weighing on the stock are expectations for a slight slowdown in organic revenue growth in the second half of the year. The recent pullback offers a good entry point for new buying.
Zebra is a Focus Buy and Long-Term Buy.
Zebra stock could yo-yo a bit in the near term until we have greater clarity on the China trade front. However, these shares trade at 19 times trailing earnings of $11.38. That’s a at least a
26% discount to the peer group and the stock’s five-year average.
Richard Moroney, CFA, Dow Theory Forecasts, www.dowtheory.com, 800-233-5922, July 8,
2019