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Logitech (LOGI) Down 3.6% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Logitech International S.A. (LOGI - Free Report) . Shares have lost about 3.6% in that time frame, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is LOGI due for a breakout? 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 Q3 Earnings Beat, Up Y/Y, Guidance Raised
Logitech continued its impressive streak of earnings beats for the ninth consecutive quarter. On an adjusted basis, the company’s third-quarter fiscal 2018 earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 56 cents by 16.1%.
The company also delivered its highest quarterly sales ever as well as highest sales growth in seven years, driven by robust sales across product categories and strong momentum in Gaming, Mobile Speakers and Video Collaboration businesses.
On a GAAP basis, Logitech reported earnings of 48 cents per share, which declined 18.6% year over year. The company’s GAAP profitability was adversely affected by one-time expense of net tax of about $16 million.
Inside the Headlines
Net sales for the quarter rose 21.8% year over year to an all-time record of $812 million, surpassing the Zacks Consensus Estimate of $754 million. Revenue growth was attributable to solid performance in Logitech’s Video Collaboration, Gaming businesses as well as Mobile Speakers business categories. Moreover, the company’s ASTRO acquisition business performed better than expected.
Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Of these, Pointing Devices and Keyboards and Combos remained flat. Tablet and Other Accessories experienced an increase of 7.2% year over year in sales. However, PC Webcams experienced a decrease of 10.6%.in sales
Gaming surged 62.1% year over year to $ 173.8 million, driven by strong momentum across its fresh products. Meanwhile, Video Collaboration grew 29.2% to $46.3 million, aided by broad-based growth in all three markets. Additionally, the Music business, which comprises Mobile Speakers units and Audio-PC & Wearables, witnessed impressive performance. Audio PC & Wearables sales surged 25.6% to $84.4 million, while Mobile Speaker segment experienced an increase in sales of 38.3% to $147.4 million. In addition, smart home category witnessed sales growth of 43.9% to $38.7 million.
Non-GAAP operating margin contracted 50 basis points year over year to 14.4%, while non-GAAP operating income jumped 18.2% year over year to $117.1 million.
Liquidity
As on Dec 31, 2017, Logitech’s cash and cash equivalents were $564.9 million compared with $513.6 million as of Dec 31, 2016. Moreover, the net cash provided by operating activities came in at $188.6 million, an increase from the year-ago tally of $148.8 million.
Guidance
Concurrent with the third-quarter fiscal 2018 results, Logitech raised fiscal-year 2018 guidance. It now expects non-GAAP operating income in the range of $270-$280 million, compared with the earlier guided range of $260-$270 million. Further, it now anticipates constant currency fiscal 2018 sales in the range of 12-14%, compared with its earlier projection of 10-12% growth.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
At this time, LOGI has a great Growth Score of A, though it is lagging a lot on the momentum front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Interestingly, LOGI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Logitech (LOGI) Down 3.6% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Logitech International S.A. (LOGI - Free Report) . Shares have lost about 3.6% in that time frame, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is LOGI due for a breakout? 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 Q3 Earnings Beat, Up Y/Y, Guidance Raised
Logitech continued its impressive streak of earnings beats for the ninth consecutive quarter. On an adjusted basis, the company’s third-quarter fiscal 2018 earnings came in at 65 cents per share, surpassing the Zacks Consensus Estimate of 56 cents by 16.1%.
The company also delivered its highest quarterly sales ever as well as highest sales growth in seven years, driven by robust sales across product categories and strong momentum in Gaming, Mobile Speakers and Video Collaboration businesses.
On a GAAP basis, Logitech reported earnings of 48 cents per share, which declined 18.6% year over year. The company’s GAAP profitability was adversely affected by one-time expense of net tax of about $16 million.
Inside the Headlines
Net sales for the quarter rose 21.8% year over year to an all-time record of $812 million, surpassing the Zacks Consensus Estimate of $754 million. Revenue growth was attributable to solid performance in Logitech’s Video Collaboration, Gaming businesses as well as Mobile Speakers business categories. Moreover, the company’s ASTRO acquisition business performed better than expected.
Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Of these, Pointing Devices and Keyboards and Combos remained flat. Tablet and Other Accessories experienced an increase of 7.2% year over year in sales. However, PC Webcams experienced a decrease of 10.6%.in sales
Gaming surged 62.1% year over year to $ 173.8 million, driven by strong momentum across its fresh products. Meanwhile, Video Collaboration grew 29.2% to $46.3 million, aided by broad-based growth in all three markets. Additionally, the Music business, which comprises Mobile Speakers units and Audio-PC & Wearables, witnessed impressive performance. Audio PC & Wearables sales surged 25.6% to $84.4 million, while Mobile Speaker segment experienced an increase in sales of 38.3% to $147.4 million. In addition, smart home category witnessed sales growth of 43.9% to $38.7 million.
Non-GAAP operating margin contracted 50 basis points year over year to 14.4%, while non-GAAP operating income jumped 18.2% year over year to $117.1 million.
Liquidity
As on Dec 31, 2017, Logitech’s cash and cash equivalents were $564.9 million compared with $513.6 million as of Dec 31, 2016. Moreover, the net cash provided by operating activities came in at $188.6 million, an increase from the year-ago tally of $148.8 million.
Guidance
Concurrent with the third-quarter fiscal 2018 results, Logitech raised fiscal-year 2018 guidance. It now expects non-GAAP operating income in the range of $270-$280 million, compared with the earlier guided range of $260-$270 million. Further, it now anticipates constant currency fiscal 2018 sales in the range of 12-14%, compared with its earlier projection of 10-12% growth.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
Logitech International S.A. Price and Consensus
Logitech International S.A. Price and Consensus | Logitech International S.A. Quote
VGM Scores
At this time, LOGI has a great Growth Score of A, though it is lagging a lot on the momentum front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Interestingly, LOGI has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.