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Computer Peripheral Equipment Industry Outlook Looks Bright
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The Zacks Computer Peripheral Equipment industry comprises companies offering computer input, output and storage devices. These include keyboards, mouse, LCD panels, smart glass, analog to digital imaging solutions, touch sensors, 3D printers & additive manufacturing and transaction-based printer products, among others.
The industry is to some extent recession-resistant due to the nature of products of the companies operating in it. Products like printers, headphones, gaming accessories and others are less likely to run out of demand. Moreover, the highly competitive nature of the industry is encouraging the participants to come up with innovative and relevant products to meet the current demand trend. This is strengthening their product portfolio.
Here are the three major themes in the industry:
The gradual shift in consumer preference from mobile gaming to a more professional gaming experience is a major growth driver. Launch of advanced gaming devices and growing popularity of e-sports leagues are expected to boost this industry further. Also, the 3D printing market presents a favorable long-term investment opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for primary designing and product modeling. A recent report by Gartner revealed that the global 3D printing industry is expected to reach $17.7 billion by 2020.
The PC market showed signs of turnaround in the second quarter of 2019 after witnessing a slowdown in shipment in the two quarters prior to it, per Gartner and IDC. Buoyant demand in the commercial market owing to the transition to Microsoft’s (MSFT - Free Report) Windows 10 is boosting PC shipment growth. Moreover, improvement in Intel’s (INTC - Free Report) CPU shortage is helping PC vendors cater to old orders and ship a healthy stockpile of new PCs into the channels, per IDC. Gartner is also optimistic about long-term demand, which spells good news for the computer peripheral industry participants. Also, with the global IT spending projected to reach $3.74 trillion in 2019 by Gartner, prospects of the industry look promising. This is because higher spending on IT instruments is expected to lead to higher sales of computer peripheral equipment.
Expanding total addressable market bodes well for the industry participants. Improving penetration into price sensitive regions like Asia Pacific and Middle East & Africa through low cost quality products enhances prospects. However, uncertainty surrounding the U.S.-China trade war makes us anxious about the near-term prospects of the industry.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Computer Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #106, which places it at the top 41% of 256 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags Sector, S&P 500
The Zacks Computer Peripheral Equipment industry has underperformed the Zacks S&P 500 composite and its own sector in the past year.
The stocks in this industry have collectively lost 13.8% compared with the Zacks Computer and Technology sector’s decline of 0.8%, and the S&P 500’s rally of 1%.
One Year Price Performance
Industry’s Current Valuation
Comparing the industry with the Zacks S&P 500 composite on the basis of price-to-sales ratio (P/S), which is a commonly used multiple for valuing computer peripheral stocks, we see that the industry’s ratio of 0.1 is lower than the S&P 500’s 3.18 and the sector’s 3.7.
Over the last five years, the industry has traded as high as 0.67X, as low as 0.07X and recorded a median of 0.50X, as the charts below show.
Price-to-Sales Ratio (TTM)
Price-to-Sales Ratio (TTM)
Bottom Line
Growing demand for professional gaming equipment and 3D printing and additive manufacturing instruments should drive the industry. Moreover, stable long-term prospects of the PC market is also a positive.
Currently, none of the stocks in the Zacks Computer Peripheral Equipment industry sports a Zacks Rank #1 (Strong Buy). Here, we present three stocks that have a Zacks Rank #2 (Buy), which investors can focus on. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Switzerland-based Logitech International S.A. (LOGI - Free Report) designs, manufactures and markets innovative peripherals like Internet video cameras, mice and trackballs, keyboards, audio and telephony products, interactive gaming devices and 3D controllers. The Zacks Consensus Estimate for current fiscal-year earnings has increased 1% to $2.17 over the past 30 days.
Fremont, CA-based Identiv, Inc. (INVE - Free Report) is a global security technology company. It provides trust solutions in the connected world, including premises, information and everyday items. The Zacks Consensus Estimate for current fiscal-year earnings has remained stable at breakeven over the past 30 days.
Based in San Jose, CA, Immersion Corporation (IMMR - Free Report) develops hardware and software technologies that enable users to interact with computers using sense of touch. Their patented technologies, which are branded TouchSense, enable devices such as mice, joysticks, knobs, and medical simulation products to deliver tactile sensations that correspond to on-screen events. The Zacks Consensus Estimate for current fiscal-year loss has widened by a penny to 31 cents over the past 30 days.
We are also presenting a stock with a Zacks Rank #3 (Hold) that investors may currently retain in their portfolio.
Andover, MA-based Mercury Systems Inc. (MRCY - Free Report) is a commercial provider of secure sensor and mission processing subsystems for defense and intelligence programs. This stock has gained 71.5% in the past year. The Zacks Consensus Estimate for current fiscal-year earnings has grown 6.8% to $2.05 over the past 30 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Computer Peripheral Equipment Industry Outlook Looks Bright
The Zacks Computer Peripheral Equipment industry comprises companies offering computer input, output and storage devices. These include keyboards, mouse, LCD panels, smart glass, analog to digital imaging solutions, touch sensors, 3D printers & additive manufacturing and transaction-based printer products, among others.
The industry is to some extent recession-resistant due to the nature of products of the companies operating in it. Products like printers, headphones, gaming accessories and others are less likely to run out of demand. Moreover, the highly competitive nature of the industry is encouraging the participants to come up with innovative and relevant products to meet the current demand trend. This is strengthening their product portfolio.
Here are the three major themes in the industry:
Zacks Industry Rank Indicates Bright Prospects
The Zacks Computer Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #106, which places it at the top 41% of 256 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags Sector, S&P 500
The Zacks Computer Peripheral Equipment industry has underperformed the Zacks S&P 500 composite and its own sector in the past year.
The stocks in this industry have collectively lost 13.8% compared with the Zacks Computer and Technology sector’s decline of 0.8%, and the S&P 500’s rally of 1%.
One Year Price Performance
Industry’s Current Valuation
Comparing the industry with the Zacks S&P 500 composite on the basis of price-to-sales ratio (P/S), which is a commonly used multiple for valuing computer peripheral stocks, we see that the industry’s ratio of 0.1 is lower than the S&P 500’s 3.18 and the sector’s 3.7.
Over the last five years, the industry has traded as high as 0.67X, as low as 0.07X and recorded a median of 0.50X, as the charts below show.
Price-to-Sales Ratio (TTM)
Price-to-Sales Ratio (TTM)
Bottom Line
Growing demand for professional gaming equipment and 3D printing and additive manufacturing instruments should drive the industry. Moreover, stable long-term prospects of the PC market is also a positive.
Currently, none of the stocks in the Zacks Computer Peripheral Equipment industry sports a Zacks Rank #1 (Strong Buy). Here, we present three stocks that have a Zacks Rank #2 (Buy), which investors can focus on. You can see the complete list of today’s Zacks #1 Rank stocks here.
Switzerland-based Logitech International S.A. (LOGI - Free Report) designs, manufactures and markets innovative peripherals like Internet video cameras, mice and trackballs, keyboards, audio and telephony products, interactive gaming devices and 3D controllers. The Zacks Consensus Estimate for current fiscal-year earnings has increased 1% to $2.17 over the past 30 days.
Fremont, CA-based Identiv, Inc. (INVE - Free Report) is a global security technology company. It provides trust solutions in the connected world, including premises, information and everyday items. The Zacks Consensus Estimate for current fiscal-year earnings has remained stable at breakeven over the past 30 days.
Based in San Jose, CA, Immersion Corporation (IMMR - Free Report) develops hardware and software technologies that enable users to interact with computers using sense of touch. Their patented technologies, which are branded TouchSense, enable devices such as mice, joysticks, knobs, and medical simulation products to deliver tactile sensations that correspond to on-screen events. The Zacks Consensus Estimate for current fiscal-year loss has widened by a penny to 31 cents over the past 30 days.
We are also presenting a stock with a Zacks Rank #3 (Hold) that investors may currently retain in their portfolio.
Andover, MA-based Mercury Systems Inc. (MRCY - Free Report) is a commercial provider of secure sensor and mission processing subsystems for defense and intelligence programs. This stock has gained 71.5% in the past year. The Zacks Consensus Estimate for current fiscal-year earnings has grown 6.8% to $2.05 over the past 30 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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