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Outlook Bright for Computer Peripheral Equipment Industry
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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.
Notably, 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. Going forward, e-sports is also likely to continue driving total addressable market in the gaming peripherals industry. Moreover, 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 report by MarketsandMarkets revealed that the global 3D printing industry is expected to reach $34.8 billion by 2024.
The worldwide PC market maintained its bullish run in the third quarter of 2019, 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. However, with the passage of Window’s 10 replacement cycle in January 2020, demand from the business circle is anticipated to weaken, thereby making us apprehensive about the computer peripheral industry, which is dependent on the PC market to some extent.
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 near-term prospects of the industry.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Computer Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #77, which places it at the top 30% of 253 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 gained 27.6% compared with the Zacks Computer and Technology sector’s rally of 38.3%, and the S&P 500’s increase of 30.7%.
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 0.53 is lower than the S&P 500’s 3.46 and the sector’s 3.55.
Over the last five years, the industry has traded as high as 6.9X, as low as 0.34X and recorded a median of 5.13X, 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. However, unpredictable long-term prospects of the PC market pose a concern.
Fremont, CA-based Identiv, Inc. (INVE - Free Report) is a global security technology company, carrying a Zacks Rank #1. It provides trust solutions in the connected world, including premises, information and everyday items. The Zacks Consensus Estimate for full-year 2019 earnings has remained stable at 3 cents over the past 30 days.
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. The stock carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal-year 2020 earnings has remained stable at $2.10 over the past 30 days.
Moreover, below are two stocks from the same space with a Zacks Rank #3 (Hold) that investors can hold on to.
Switzerland-based Logitech International S.A. (LOGI - Free Report) designs, manufactures and markets innovative peripherals like Internet video cameras, mouse and trackballs, keyboards, audio and telephony products, interactive gaming devices and 3D controllers. The Zacks Consensus Estimate for fiscal-year 2020 earnings has remained stable at $2.13 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 mouse, joysticks, knobs, and medical simulation products to deliver tactile sensations that correspond to on-screen events. The Zacks Consensus Estimate for full-year 2019 loss has remained stable at 43 cents over the past 30 days.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Outlook Bright for Computer Peripheral Equipment Industry
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.
Notably, 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 Solid Prospects
The Zacks Computer Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #77, which places it at the top 30% of 253 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 gained 27.6% compared with the Zacks Computer and Technology sector’s rally of 38.3%, and the S&P 500’s increase of 30.7%.
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 0.53 is lower than the S&P 500’s 3.46 and the sector’s 3.55.
Over the last five years, the industry has traded as high as 6.9X, as low as 0.34X and recorded a median of 5.13X, as the charts below show.
Price-to-Sales Ratio (TTM)
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Price-to-Sales Ratio (TTM)
Bottom Line
Growing demand for professional gaming equipment and 3D printing and additive manufacturing instruments should drive the industry. However, unpredictable long-term prospects of the PC market pose a concern.
Below are two stocks that carry either a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fremont, CA-based Identiv, Inc. (INVE - Free Report) is a global security technology company, carrying a Zacks Rank #1. It provides trust solutions in the connected world, including premises, information and everyday items. The Zacks Consensus Estimate for full-year 2019 earnings has remained stable at 3 cents over the past 30 days.
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. The stock carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal-year 2020 earnings has remained stable at $2.10 over the past 30 days.
Moreover, below are two stocks from the same space with a Zacks Rank #3 (Hold) that investors can hold on to.
Switzerland-based Logitech International S.A. (LOGI - Free Report) designs, manufactures and markets innovative peripherals like Internet video cameras, mouse and trackballs, keyboards, audio and telephony products, interactive gaming devices and 3D controllers. The Zacks Consensus Estimate for fiscal-year 2020 earnings has remained stable at $2.13 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 mouse, joysticks, knobs, and medical simulation products to deliver tactile sensations that correspond to on-screen events. The Zacks Consensus Estimate for full-year 2019 loss has remained stable at 43 cents over the past 30 days.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>