Zebra Technologies: Zacks’ Bull of the Day Play

Zebra Technologies (ZBRA) is a leading global manufacturer of specialty printers, scanners, RFID and location & motion tracking services that are used by businesses for identifying, tacking and managing important assets. The company has the largest installed base of thermal printers in the industry. Their portfolio of marking and printing technologies including Radio Frequency Identification (RFID) and Real Time Location solutions that help business improve their processes.

 

Founded in 1969 and headquarter in Lincolnshire, IL, the company now has approximately 7,100 employees in more than 122 offices across 81 countries.

In 2013, 44% of the sales were in North America, followed by 34% in Europe, Middle East & Africa and 15% in Asia Pacific. Retail, Travel & Leisure, Manufacturing and Healthcare are the top industries, the company supplies its products and services to.

Excellent Third Quarter Results

The company reported its Q3 2014 results on November 4. Sales jumped to $303 million, up 15.1% from Q3 of 2013, with growth across all regions and multiple product lines. High pipeline activity generated many large deals in key industries. Three out of four geographic reporting regions recorded double digit growth, with 16% growth in North America, where they had a surge in shipments ahead of the holiday season.

Gross margin expanded by 1.2% to 50.0%. Margin expansion was thanks mainly to the higher product volume and lower inbound freight cost. Adjusted net income for the quarter was $0.93 per share, ahead of the Zacks Consensus Estimate of $0.85 per share and also above the management’s guidance range.

The company has an excellent record of delivering positive surprises. The company also provided their guidance for the current quarter; they expect sales in the range of $300 million to $310 million, up 7% from a year ago. The mid-point of this guidance range translates into a sales growth of 14% for the full year. The balance sheet remained with strong, with no long-term debt and $542 million in cash and short term investments.

On October 27, Zebra completed the acquisition of Motorola Solution’s Enterprise business for $3.45 billion in cash. According to the management, this business is a strategic fit for Zebra as it “significantly expands and strengthens Zebra’s product portfolio, geographic reach, go-to-market channels and industries served. The combined organization has about 20,000 channel partners in more than 100 countries, and approximately 4,300 US and international patents issued and pending.”

Estimates Rising

Thanks to excellent results and guidance, analysts have revised their estimates for the company. Zacks Consensus Estimates for 2014 and 2015 are currently $3.90 per share and $5.68 per share, compared with $3.51 per share and $4.20 per share respectively, 60 days ago.
Soaring estimates sent the stock to a Zacks Rank #1 (Strong Buy) last month.

 

The Bottom Line

In order to meet customers’’ evolving needs, Zebra continues to invest in emerging technology trends and new products development. Zebra’s products and solutions provide businesses greater real-time insights into location and movements of their assets and people and help them improve their business processes and make smarter decisions.
With continued focus on innovation and great diversity of product lines, channels and geographies, Zebra looks well poised to capitalize on growth trends in e-commerce and “Internet of Things”.

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