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Why Is Logitech (LOGI) Up 14.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have added about 14.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Logitech due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Logitech's Q2 Earnings Beat Estimates, Revenues Miss
Logitech reported mixed results in second-quarter fiscal 2023. The computer peripheral and software maker’s fiscal second-quarter non-GAAP earnings of 84 cents per share surpassed the Zacks Consensus Estimate of 81 cents but registered a year-over-year decline of 20%.
The dismal bottom line reflects lower revenues, along with industry-wide elevated component costs and unfavorable currency movements. However, reduced operating expenses partially offset the negative impacts of the aforementioned factors.
Logitech’s fiscal second-quarter revenues plunged 12% year over year to $1.15 billion and fell short of the consensus mark of $1.21 billion. The decline can be attributed to a strong year-over-year comparison, where revenues grew 3.9% in the second quarter of fiscal 2022.
In the past year, Logitech benefited from the elevated demand for its video collaboration, keyboards & combos and pointing device tools, mainly driven by the heightening of work-from-home and learn-from-home trends. Additionally, the demand for gaming products shot up due to the growing popularity of online video games and eSports amid the stay-at-home scenario. However, the demand softened due to the reopening of economic and business activities.
Segment Details
Logitech registered a sales decline across the majority of key product categories except for Video Collaboration, which increased 2% year over year to $236.2 million.
Revenues from Pointing Devices dropped 2% year over year to $185.2 million, while Gaming revenues plunged 10% year over year to $297.7 million. Keyboards & Combos’ sales lost 15% to $200.9 million. Sales from PC Webcams were down 36% to $60.2 million, while Tablet and Other Accessories sales dipped 33% to $54.2 million.
The Audio & Wearables segment’s sales declined 25% year over year to $73.3 million. Mobile Speakers’ sales decreased 1% to $39.2 million. The Other segment’s sales plunged 61% year over year to $2.2 million.
Margins & Operating Metrics
Non-GAAP gross profit decreased 19.1% to $443.4 million from the year-ago quarter’s $548.1 million. The non-GAAP gross margin contracted 340 basis points from the prior-year quarter to 38.6%. The year-over-year decline was mainly due to increased component costs, higher logistics expenses and unfavorable currency movements.
Non-GAAP operating expenses declined 14.8% to $286.9 million. As a percentage of revenues, non-GAAP operating expenses shot down to 25% from the year-earlier quarter’s figure of 25.8%.
Non-GAAP operating income plummeted 26% to $156.5 million from $211.5 million reported in the year-ago quarter. The operating margin declined to 13.6% from 16.2% in the year-ago quarter. The decline in profits mainly reflects reduced revenues and gross margins, partially offset by lower operating expenses.
Liquidity and Shareholder Return
As of Sep 30, 2022, LOGI’s cash and cash equivalents were $868.5 million, down from $1.1 billion recorded in the previous quarter. Additionally, the company used $73 million in cash for operational activities in the second quarter.
In the second quarter of fiscal 2023, the company repurchased shares worth $117 million and paid dividends worth $159 million.
Fiscal 2023 Guidance
Considering the current macroeconomic challenges, LOGI kept its fiscal 2023 guidance unchanged.
Logitech expects sales to decline between 4% and 8% in constant currency, while non-GAAP operating income is anticipated in the range of $650-$750 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Logitech has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Logitech (LOGI) Up 14.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have added about 14.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Logitech due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Logitech's Q2 Earnings Beat Estimates, Revenues Miss
Logitech reported mixed results in second-quarter fiscal 2023. The computer peripheral and software maker’s fiscal second-quarter non-GAAP earnings of 84 cents per share surpassed the Zacks Consensus Estimate of 81 cents but registered a year-over-year decline of 20%.
The dismal bottom line reflects lower revenues, along with industry-wide elevated component costs and unfavorable currency movements. However, reduced operating expenses partially offset the negative impacts of the aforementioned factors.
Logitech’s fiscal second-quarter revenues plunged 12% year over year to $1.15 billion and fell short of the consensus mark of $1.21 billion. The decline can be attributed to a strong year-over-year comparison, where revenues grew 3.9% in the second quarter of fiscal 2022.
In the past year, Logitech benefited from the elevated demand for its video collaboration, keyboards & combos and pointing device tools, mainly driven by the heightening of work-from-home and learn-from-home trends. Additionally, the demand for gaming products shot up due to the growing popularity of online video games and eSports amid the stay-at-home scenario. However, the demand softened due to the reopening of economic and business activities.
Segment Details
Logitech registered a sales decline across the majority of key product categories except for Video Collaboration, which increased 2% year over year to $236.2 million.
Revenues from Pointing Devices dropped 2% year over year to $185.2 million, while Gaming revenues plunged 10% year over year to $297.7 million. Keyboards & Combos’ sales lost 15% to $200.9 million. Sales from PC Webcams were down 36% to $60.2 million, while Tablet and Other Accessories sales dipped 33% to $54.2 million.
The Audio & Wearables segment’s sales declined 25% year over year to $73.3 million. Mobile Speakers’ sales decreased 1% to $39.2 million. The Other segment’s sales plunged 61% year over year to $2.2 million.
Margins & Operating Metrics
Non-GAAP gross profit decreased 19.1% to $443.4 million from the year-ago quarter’s $548.1 million. The non-GAAP gross margin contracted 340 basis points from the prior-year quarter to 38.6%. The year-over-year decline was mainly due to increased component costs, higher logistics expenses and unfavorable currency movements.
Non-GAAP operating expenses declined 14.8% to $286.9 million. As a percentage of revenues, non-GAAP operating expenses shot down to 25% from the year-earlier quarter’s figure of 25.8%.
Non-GAAP operating income plummeted 26% to $156.5 million from $211.5 million reported in the year-ago quarter. The operating margin declined to 13.6% from 16.2% in the year-ago quarter. The decline in profits mainly reflects reduced revenues and gross margins, partially offset by lower operating expenses.
Liquidity and Shareholder Return
As of Sep 30, 2022, LOGI’s cash and cash equivalents were $868.5 million, down from $1.1 billion recorded in the previous quarter. Additionally, the company used $73 million in cash for operational activities in the second quarter.
In the second quarter of fiscal 2023, the company repurchased shares worth $117 million and paid dividends worth $159 million.
Fiscal 2023 Guidance
Considering the current macroeconomic challenges, LOGI kept its fiscal 2023 guidance unchanged.
Logitech expects sales to decline between 4% and 8% in constant currency, while non-GAAP operating income is anticipated in the range of $650-$750 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Logitech has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.