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Logitech (LOGI - Free Report) has been an enormous beneficiary of the stay-at-home environment. Its sales exploded this past year as the world scrambles to function remotely. Logitech's best-in-class portfolio of webcams, gaming accessories, computer mouse, digital audio equipment, and other digital accessories was in extraordinarily high demand amid the pandemic.
There has been some concern that Logitech was a 'one-trick pony' of returns during the global lockdowns, but I couldn't disagree more. The world economy will be working more mobile than ever in the New Normal as managers realize productivity improvements in the remote working environments. LOGI corrected nearly 25% from its February highs to the March lows and remains 10% below its peak.
Logitech has been able to produce accelerating topline growth throughout 2020. This enterprise is expected to sum up its fiscal 2021 year (which ended 3/31/21) with sales growth of 57-60% and a record operating income of $1.05 billion. The business has never experienced growth like this in its nearly 2-decade history as a public company, and this secular shift to remote functionality will continue to be a tailwind that fills Logitech's sails in the years to come.
Analysts have been increasingly optimistic about this digital powerhouse's future, raising price targets and EPS estimates across all time horizons propelling LOGI into a Zacks Rank #1 (Strong Buy).
The Business
Over the years, Logitech has been best known for its gaming & computer accessory (aka mouse and keyboard) segments, which made up over 60% of its topline in the pre-pandemic world. Despite the companies relatively lackluster pre-pandemic revenue growth, it had been able to produce expanding margins with its (non-GAAP) profitability appreciating in the double digits since 2016, illustrating operational excellence.
The global quarantine environment drove Logitech's highly diverse portfolio to the next level. Throughout the pandemic the business has experienced accelerating sales improvements each quarter, and analysts anticipate this will continue into 2021.
Over the past year, the largest growth drivers for the enterprise have been their best-in-class webcams (which I was fortunate to acquire after a 4-week backorder due to excess demand), which more than quadrupled in year-over-year sales this past quarter, along with tablet accessories which saw similar growth figures. The remote worker wants to be able to be work with the full functionality of being in the office but ubiquitously, which has driven these segments to record heights.
Gaming continues to be the leading sales driver for Logitech, with the global quarantine compelling more engagement in this type of digital entertainment. This segment has already outpaced last year's full-year fiscal revenue (fiscal year ending at the end of March) by 33%, with Q4 yet to be reported.
Financials
Logitech has been illustrating consistently growing cash flows for the past 5 years, which has led to the business being flush in cash & equivalents as of the latest reported quarter. The enterprise is completely funded by internal operations with no debt in the books.
The business has an enormous amount of financial flexibility for potential acquisitions and organic growth projects.
The Chart
LOGI is looking very sound from a technical standpoint, with strong upward momentum from our recent March 8th lows and launched through its 50-day moving average on Thursday. This level appears to have been a robust support on Thursday and has represented a relatively good support level over the past few months.
Final Thoughts
The New Normal's consumption trends are going to look a lot more like what we saw during the pandemic than in the pre-pandemic economy. The spending trends on digital technology for remote functionality will continue, and Logitech's diverse portfolio of best-in-class tech will continue to propel growth.
4 out of 6 analysts are calling this stock a buy today, with no sell ratings. Price targets represent an upside as high as 25% from where the stock is trading at today.
More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Image: Bigstock
Bull Of The Day: Logitech (LOGI)
Logitech (LOGI - Free Report) has been an enormous beneficiary of the stay-at-home environment. Its sales exploded this past year as the world scrambles to function remotely. Logitech's best-in-class portfolio of webcams, gaming accessories, computer mouse, digital audio equipment, and other digital accessories was in extraordinarily high demand amid the pandemic.
There has been some concern that Logitech was a 'one-trick pony' of returns during the global lockdowns, but I couldn't disagree more. The world economy will be working more mobile than ever in the New Normal as managers realize productivity improvements in the remote working environments. LOGI corrected nearly 25% from its February highs to the March lows and remains 10% below its peak.
Logitech has been able to produce accelerating topline growth throughout 2020. This enterprise is expected to sum up its fiscal 2021 year (which ended 3/31/21) with sales growth of 57-60% and a record operating income of $1.05 billion. The business has never experienced growth like this in its nearly 2-decade history as a public company, and this secular shift to remote functionality will continue to be a tailwind that fills Logitech's sails in the years to come.
Analysts have been increasingly optimistic about this digital powerhouse's future, raising price targets and EPS estimates across all time horizons propelling LOGI into a Zacks Rank #1 (Strong Buy).
The Business
Over the years, Logitech has been best known for its gaming & computer accessory (aka mouse and keyboard) segments, which made up over 60% of its topline in the pre-pandemic world. Despite the companies relatively lackluster pre-pandemic revenue growth, it had been able to produce expanding margins with its (non-GAAP) profitability appreciating in the double digits since 2016, illustrating operational excellence.
The global quarantine environment drove Logitech's highly diverse portfolio to the next level. Throughout the pandemic the business has experienced accelerating sales improvements each quarter, and analysts anticipate this will continue into 2021.
Over the past year, the largest growth drivers for the enterprise have been their best-in-class webcams (which I was fortunate to acquire after a 4-week backorder due to excess demand), which more than quadrupled in year-over-year sales this past quarter, along with tablet accessories which saw similar growth figures. The remote worker wants to be able to be work with the full functionality of being in the office but ubiquitously, which has driven these segments to record heights.
Gaming continues to be the leading sales driver for Logitech, with the global quarantine compelling more engagement in this type of digital entertainment. This segment has already outpaced last year's full-year fiscal revenue (fiscal year ending at the end of March) by 33%, with Q4 yet to be reported.
Financials
Logitech has been illustrating consistently growing cash flows for the past 5 years, which has led to the business being flush in cash & equivalents as of the latest reported quarter. The enterprise is completely funded by internal operations with no debt in the books.
The business has an enormous amount of financial flexibility for potential acquisitions and organic growth projects.
The Chart
LOGI is looking very sound from a technical standpoint, with strong upward momentum from our recent March 8th lows and launched through its 50-day moving average on Thursday. This level appears to have been a robust support on Thursday and has represented a relatively good support level over the past few months.
Final Thoughts
The New Normal's consumption trends are going to look a lot more like what we saw during the pandemic than in the pre-pandemic economy. The spending trends on digital technology for remote functionality will continue, and Logitech's diverse portfolio of best-in-class tech will continue to propel growth.
4 out of 6 analysts are calling this stock a buy today, with no sell ratings. Price targets represent an upside as high as 25% from where the stock is trading at today.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>