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Zebra Technologies (ZBRA) to Post Q4 Earnings: What's in Store?

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Zebra Technologies Corporation (ZBRA - Free Report) is scheduled to report fourth-quarter 2020 results on Feb 11, before the opening bell.

Q3 Performance

In third-quarter 2020, Zebra Technologies reported a year-over-year decline of 5% in earnings, while revenues inched up 0.2%. However, the company surpassed the Zacks Consensus Estimate on both counts.

In the trailing four quarters, the company beat estimates twice, missed once and matched the remaining one. The company has a trailing four-quarter earnings surprise of 4.8%, on average.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at $3.79, suggesting growth of 6.5% from the prior-year quarter. The estimate has moved south by 1% over the past 30 days. The Zacks Consensus Estimate for total sales stands at $1.26 billion, indicating an improvement of 5.4% from the year-ago reported figure.

Price Performance

Shares of Zebra Technologies have gained 63.8% in the past year, compared with the industry's rally of 42.7%.

Factors to Note

Zebra Technologies serves a diverse mix of customers. While some of its customers have been suffering declines or suspensions in their operations amid the pandemic, others have been experiencing higher business volume. Demand from large retailers remains robust as e-commerce and buy online initiated transactions have been surging dramatically through the coronavirus crisis. In the transportation logistics space, strong e-commerce growth has been favorable. However, passenger airlines, rental car providers and other related businesses remain challenged, which might have weighed on the fourth-quarter performance.

In the manufacturing sector, key segments within process manufacturing, such as food and pharmaceutical companies have been performing well amid the ongoing pandemic, and the fourth quarter was no exception. The U.S manufacturing sector has been showing signs of expansion through the fourth quarter. In fact, Chinese manufacturing has been strong. These factors along with a strong backlog are likely to get reflected in the to-be-reported quarter’s top line.

In September 2020, the company has acquired Reflexis Systems, a provider of task and workforce management, execution, and communication solutions for customers in the retail, food service, hospitality, and banking industries. Through this buyout, the company intends to enhance its solution offerings to customers in those industries by combining Reflexis’ platform with its existing software solutions. The acquisition might have contributed to the company’s performance in the quarter to be reported.

However, the pandemic has been disproportionately impacting some of the company’s smaller customers and certain end markets, which resulted in a significant shift in business mix. This along with premium shipping costs and impact of tariffs may have dented earnings in the to-be-reported quarter. Further, costs associated with the company’s product sourcing diversification initiative is likely to have impacted the to-be-reported quarter’s performance. However, these negatives might have been somewhat offset by the company’s efforts to cut down discretionary costs.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Zebra Technologies this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Zebra Technologies has an Earnings ESP of -0.11%.

Zacks Rank: Currently, the company carries a Zacks Rank #3.

Stocks Worth a Look

Here are some Industrial Products stocks worth considering as these have the right combination of elements to post an earnings beat in their upcoming releases:

Altra Industrial Motion Corp. (AIMC - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axon Enterprise Inc. has a Zacks Rank of 2 and an Earnings ESP of +2.34%, at present.

Sonoco Products Company (SON - Free Report) , currently a Zacks #3 Ranked stock, has an Earnings ESP of +0.52%.

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