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Zebra (ZBRA) to Post Q2 Earnings: Is a Beat in the Cards?

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Zebra Technologies Corporation (ZBRA - Free Report) is slated to report second-quarter 2021 results on Aug 03, before market open.

The company’s earnings beat expectations in each of the trailing four quarters, the surprise being 11.99%, on average. In the last reported quarter, earnings of $4.79 per share surpassed the Zacks Consensus Estimate of $4.41 by 8.62%.

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In the past three months, the company’s shares have gained 15.3% compared with the industry’s growth of 13.1%.

Key Factors

Zebra is anticipated to have benefited from robust demand for its printing and supplies, enterprise mobile computing, RFID product lines, as well as services and software in the second quarter. The growing popularity for the company’s Enterprise Asset Intelligence solutions, supported by its focus on investing in product developments, is also likely to have augmented its top-line performance in the to-be-reported quarter.

Acquired assets boosted the company’s sales by 1.4% in first-quarter 2021, a trend that is most likely to have continued in the second quarter, owing to the benefits from its buyout of Reflexis Systems, Inc. in September 2020.  The addition of Reflexis’ advanced workforce management and real-time task management solutions has been augmenting Zebra’s software offerings across retail and other key markets.

Zebra’s focus on supply-chain optimization and managing discretionary expenses is likely to have been beneficial in the second quarter. Also, the company’s efforts to improve operational productivity, coupled with a healthy liquidity position, might have helped it maintain a solid margin.

However, escalating cost of sales and operating expenses have been a concern for the company. In first-quarter 2021, its cost of sales rose 19.5%, year over year. Total operating expenses increased 18.9% in the quarter. High costs might have adversely impacted its margin and profitability in the second quarter as well.

The Zacks Consensus Estimate for the company’s second-quarter total revenues is currently pegged at $1,345 million, suggesting increase of 40.7% from the year-ago reported number. The figure is relatively flat with the quarter-ago reported number. The consensus estimate for earnings of $4.12 suggests an improvement of 71% year over year, but a decline of 14% sequentially.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

This is the case here as given below:

Earnings ESP: Zebra has an Earnings ESP of +0.81%, as the Most Accurate Estimate is pegged at $4.15, higher than the Zacks Consensus Estimate of $4.12.

Zacks Rank: The company carries a Zacks Rank #2.

Other Key Picks

Here are some other companies that you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Eaton Corporation plc (ETN - Free Report) has an Earnings ESP of +2.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Deere & Company (DE - Free Report) has an Earnings ESP of +11.97% and Zacks Rank #2.

Donaldson Company, Inc. (DCI - Free Report) has an Earnings ESP of +3.03% and a Zacks Rank of 2.