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Logitech International SA

LOGI

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Shares of Logitech International SA (LOGI - Analyst Report) have been moving higher since the company released upbeat fiscal fourth quarter 2012 results, including a 143% earnings surprise. The announcement of restructuring plans and new product launches were also impressive.

The peripherals manufacturer for computer and digital platforms has a Zacks #1 Rank (Strong Buy) and the stock nearing its 52-week high.

Driving Catalysts

On April 25, Logitech International reported fiscal fourth quarter 2012 (ended March 31, 2012) earnings per share of 17 cents, 10 cents ahead of the Zacks Consensus Estimate and 13% higher than the year-ago quarter.

Net sales declined 3% but was more than offset by an 8% reduction in cost of sales. Gross margin settled at 36.4%, up 360 basis points year over year. Operating expenses plummeted 3% in the quarter.

In addition to better-than-expected fourth quarter results, Logitech undertook restructuring initiatives to save roughly $80 million in annual operating costs – about 60% to be realized from the reduction of 450 positions or 13% of the indirect workforce.

New products were launched recently, including a 20-Button Gaming Mouse; a solar wireless keyboard for Mac, iPad or iPhone; and light-powered protection for iPad, among others.

Moreover, Logitech International anticipates financial gains on the back of a strong product portfolio, operating cost savings from restructuring activities and simplification of business operations.

Estimates Move Higher

Over the last 60 days, the Zacks Consensus Estimate for this fiscal year increased 35% to 74 cents, while it increased 2% to 98 cents for next fiscal year. The estimates represent year-over-year growth of 80% for the year ending March 2013 and 33% for the year ending March 2014.

Valuation

Considering the company’s growth prospects, its valuation looks reasonable on a P/E basis. Logitech is currently trading at a forward P/E of 14.38x, up 28% from the peer group average of 11.22x. However, ROE stands at 6.1%, compared with its peer group average of 21.5%.

Earnings per share estimates for fiscal 2013 are moving higher for Logitech, as can be observed from the 12 Month EPS chart below.

Headquartered in Apples, Switzerland, Logitech International S.A. develops, manufactures and sells peripherals for computers and digital platforms through its subsidiaries located in roughly 102 countries. As of March 31, 2012, Logitech employed about 9,000 people. The company was founded in 1981 and has a market cap of about $1.74 billion.

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