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Here's Why You Should Add Logitech (LOGI) to Your Portfolio
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Shares of Swiss high-tech company, Logitech International SA (LOGI - Free Report) , have yielded a robust return of 39.4% year to date, miles ahead of the Zacks categorized Computer-Peripheral Equipment industry’s average gain of 16.4%.
Robust fundamentals, solid earnings surprise history and an upward estimate revision of the stock in recent times has caught our eyes. Read on to find out the key factors which makes this Zacks Rank #2 (Buy) company an attractive proposition for investors right now.
Why Should You Buy?
Solid Earnings History: With a string of earnings beats over the past 17 quarters, the company’s surprise history is quite spectacular. In the recently reported fourth-quarter fiscal 2017 results, Logitech scored its sixth consecutive earnings beat, as adjusted earnings of 15 cents per share beat the Zacks Consensus Estimate by 25.0%.
Impressive ROE: Logitech’s Return on Equity (ROE) ratio is 26.0%, well above the industry average of 2.4%. This highlights that the company reinvests more efficiently compared to the industry.
Solid VGM Score: Logitech also has a Zacks VGM score of ‘B’. The VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics, and a good VGM score indicates stronger chances of success. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Growth Drivers: Growing adoption of new mobile platforms in both mature and emerging markets are fueling the demand for Logitech’s peripherals and accessories. The company’s fourth-quarter fiscal 2017 results were driven by strong, broad-based momentum in its Retail segment businesses, which grew a record 15% year over year in constant currency during the fiscal fourth-quarter of 2017. This was the highest quarterly growth achieved by Retail in six years.
Encouragingly, the company is focused on venturing into new businesses. In the past three years, it has grown successful businesses, including Bluetooth Speakers and Video Collaboration via advanced offerings. Apart from this, Logitech’s cloud-based video-conferencing services were also key growth drivers. Encouragingly, the company has quadrupled its profits and accelerated growth over the past four years.
This apart, the company’s diligent efforts to reduce overall cost structure by slashing product, overhead and infrastructure costs, are also driving margin expansion. During the fourth quarter of fiscal 2017, Logitech’s non-GAAP gross margin was up 430 basis points to 37.4% year over year and non-GAAP operating margin expanded a remarkable 210 bps year over year to 7.3% on account of stringent cost control measures.
Analyst Sentiment Positive: Analysts have become increasingly bullish on the company over the past month, as the Zacks Consensus Estimate for fiscal 2018 earnings inched up over the same time frame, from $1.20 to $1.21, on the back of two upward estimate revisions.
Other Stocks to Consider
Some other stocks worth considering in the industry are listed below:
Cohu, Inc. (COHU - Free Report) has a striking earnings surprise history with an average positive surprise of 121.5% over the trailing four quarters, beating estimates all through. It sports a Zacks Rank #1.
Adobe Systems Incorporated (ADBE - Free Report) holds a Zacks Rank #2 and generated an average earnings surprise of 7.1% over the trailing four quarters, with beats each time.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>
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Here's Why You Should Add Logitech (LOGI) to Your Portfolio
Shares of Swiss high-tech company, Logitech International SA (LOGI - Free Report) , have yielded a robust return of 39.4% year to date, miles ahead of the Zacks categorized Computer-Peripheral Equipment industry’s average gain of 16.4%.
Robust fundamentals, solid earnings surprise history and an upward estimate revision of the stock in recent times has caught our eyes. Read on to find out the key factors which makes this Zacks Rank #2 (Buy) company an attractive proposition for investors right now.
Why Should You Buy?
Solid Earnings History: With a string of earnings beats over the past 17 quarters, the company’s surprise history is quite spectacular. In the recently reported fourth-quarter fiscal 2017 results, Logitech scored its sixth consecutive earnings beat, as adjusted earnings of 15 cents per share beat the Zacks Consensus Estimate by 25.0%.
Impressive ROE: Logitech’s Return on Equity (ROE) ratio is 26.0%, well above the industry average of 2.4%. This highlights that the company reinvests more efficiently compared to the industry.
Solid VGM Score: Logitech also has a Zacks VGM score of ‘B’. The VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics, and a good VGM score indicates stronger chances of success. Our research shows that stocks with Style Scores of ‘A’ or ‘B,’ when combined with Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Growth Drivers: Growing adoption of new mobile platforms in both mature and emerging markets are fueling the demand for Logitech’s peripherals and accessories. The company’s fourth-quarter fiscal 2017 results were driven by strong, broad-based momentum in its Retail segment businesses, which grew a record 15% year over year in constant currency during the fiscal fourth-quarter of 2017. This was the highest quarterly growth achieved by Retail in six years.
Encouragingly, the company is focused on venturing into new businesses. In the past three years, it has grown successful businesses, including Bluetooth Speakers and Video Collaboration via advanced offerings. Apart from this, Logitech’s cloud-based video-conferencing services were also key growth drivers. Encouragingly, the company has quadrupled its profits and accelerated growth over the past four years.
This apart, the company’s diligent efforts to reduce overall cost structure by slashing product, overhead and infrastructure costs, are also driving margin expansion. During the fourth quarter of fiscal 2017, Logitech’s non-GAAP gross margin was up 430 basis points to 37.4% year over year and non-GAAP operating margin expanded a remarkable 210 bps year over year to 7.3% on account of stringent cost control measures.
Analyst Sentiment Positive: Analysts have become increasingly bullish on the company over the past month, as the Zacks Consensus Estimate for fiscal 2018 earnings inched up over the same time frame, from $1.20 to $1.21, on the back of two upward estimate revisions.
Other Stocks to Consider
Some other stocks worth considering in the industry are listed below:
Applied Optoelectronics, Inc. (AAOI - Free Report) has an outstanding positive average earnings surprise of 118.3% for the trailing four quarters, beating estimates all through. It sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cohu, Inc. (COHU - Free Report) has a striking earnings surprise history with an average positive surprise of 121.5% over the trailing four quarters, beating estimates all through. It sports a Zacks Rank #1.
Adobe Systems Incorporated (ADBE - Free Report) holds a Zacks Rank #2 and generated an average earnings surprise of 7.1% over the trailing four quarters, with beats each time.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>