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Zebra (ZBRA) Benefits From End Markets, Hurt by Cost Woes
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Zebra Technologies Corporation (ZBRA - Free Report) is poised to gain from its presence in the diverse end markets, enabling it to offset risks associated with a single market. Solid demand for ZBRA’s intelligent automation solutions, task management and prescriptive analytics software solutions, enterprise mobile computing and others are likely to drive its performance in the quarters ahead. Also, the growing popularity of its Enterprise Asset Intelligence solutions, supported by product development investments, is anticipated to benefit ZBRA over time.
ZBRA has always been keen on expanding its business through acquisitions and alliances. The acquisition of Matrox Imaging (June 2022) will enable ZBRA to combine its fixed industrial scanning and machine vision portfolio with Matrox’s expertise in the imaging market. Its buyout of antuit.ai in October 2021 enhanced its retail software portfolio that includes the likes of Workforce Connect and SmartCount solutions. Also, the acquisition of Fetch Robotics, Inc. (last August) enabled Zebra to offer customers a comprehensive line of advanced robotics solutions.
Zebra focuses on rewarding its shareholders through share repurchase programs. ZBRA repurchased shares worth $305 million in the first three months of 2022. Also, in May 2022, ZBRA authorized a share repurchase program worth $1 billion. ZBRA left to repurchase shares worth $1.2 billion in aggregate with the new buyback authorization. In July 2019, ZBRA had authorized a repurchase program of up to $1 billion of its outstanding shares. Zebra had $392 million worth of shares left for repurchase under its buyback plan while exiting first-quarter 2022.
However, challenges related to escalating costs and expenses pose a concern. In the first quarter of 2022, Zebra’s cost of sales and operating expense increased 14.9% and 11% each, on a year-over-year basis. If not checked, raw material inflation, supply-chain challenges and labor market challenges might affect ZBRA’s top-line performance in the near term.
Zebra operates across diverse regions. So, its global presence exposes it to various environmental laws and regulations in the countries where it operates. Adverse forex affected ZBRA’s sales by 0.1% year over year in first-quarter 2022. In the quarters ahead, ZBRA’s overseas business might take a hit from a stronger U.S. dollar.
Image Source: Zacks Investment Research
In the past three months, this currently Zacks Rank #3 (Hold) stock has dropped 31.1% compared with the industry’s decline of 28.8%.
Zacks Rank & Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
AIT’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022) in the past 60 days. The stock has dropped 9.7% in the past three months.
RBC Bearings Incorporated presently has a Zacks Rank of 1. ROLL delivered a trailing four-quarter earnings surprise of 3.4%, on average.
ROLL’s earnings estimates have increased 9.7% for fiscal 2023 (ending March 2022) in the past 60 days. Its shares have declined 11.6% in the past three months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 (Buy) Ranked. FERG’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, the stock’s earnings estimates have increased 4.7% for fiscal 2022 (ending July 2022). The same has declined 18.8% in the past three months.
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Zebra (ZBRA) Benefits From End Markets, Hurt by Cost Woes
Zebra Technologies Corporation (ZBRA - Free Report) is poised to gain from its presence in the diverse end markets, enabling it to offset risks associated with a single market. Solid demand for ZBRA’s intelligent automation solutions, task management and prescriptive analytics software solutions, enterprise mobile computing and others are likely to drive its performance in the quarters ahead. Also, the growing popularity of its Enterprise Asset Intelligence solutions, supported by product development investments, is anticipated to benefit ZBRA over time.
ZBRA has always been keen on expanding its business through acquisitions and alliances. The acquisition of Matrox Imaging (June 2022) will enable ZBRA to combine its fixed industrial scanning and machine vision portfolio with Matrox’s expertise in the imaging market. Its buyout of antuit.ai in October 2021 enhanced its retail software portfolio that includes the likes of Workforce Connect and SmartCount solutions. Also, the acquisition of Fetch Robotics, Inc. (last August) enabled Zebra to offer customers a comprehensive line of advanced robotics solutions.
Zebra focuses on rewarding its shareholders through share repurchase programs. ZBRA repurchased shares worth $305 million in the first three months of 2022. Also, in May 2022, ZBRA authorized a share repurchase program worth $1 billion. ZBRA left to repurchase shares worth $1.2 billion in aggregate with the new buyback authorization. In July 2019, ZBRA had authorized a repurchase program of up to $1 billion of its outstanding shares. Zebra had $392 million worth of shares left for repurchase under its buyback plan while exiting first-quarter 2022.
However, challenges related to escalating costs and expenses pose a concern. In the first quarter of 2022, Zebra’s cost of sales and operating expense increased 14.9% and 11% each, on a year-over-year basis. If not checked, raw material inflation, supply-chain challenges and labor market challenges might affect ZBRA’s top-line performance in the near term.
Zebra operates across diverse regions. So, its global presence exposes it to various environmental laws and regulations in the countries where it operates. Adverse forex affected ZBRA’s sales by 0.1% year over year in first-quarter 2022. In the quarters ahead, ZBRA’s overseas business might take a hit from a stronger U.S. dollar.
Image Source: Zacks Investment Research
In the past three months, this currently Zacks Rank #3 (Hold) stock has dropped 31.1% compared with the industry’s decline of 28.8%.
Zacks Rank & Stocks to Consider
Some better-ranked companies from the industrial products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AIT’s earnings estimates have increased 5.9% for fiscal 2022 (ending June 2022) in the past 60 days. The stock has dropped 9.7% in the past three months.
RBC Bearings Incorporated presently has a Zacks Rank of 1. ROLL delivered a trailing four-quarter earnings surprise of 3.4%, on average.
ROLL’s earnings estimates have increased 9.7% for fiscal 2023 (ending March 2022) in the past 60 days. Its shares have declined 11.6% in the past three months.
Ferguson plc (FERG - Free Report) is presently Zacks #2 (Buy) Ranked. FERG’s earnings surprise in the last four quarters was 13.7%, on average.
In the past 60 days, the stock’s earnings estimates have increased 4.7% for fiscal 2022 (ending July 2022). The same has declined 18.8% in the past three months.