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Why Is Logitech (LOGI) Down 5.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Logitech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Logitech's Q3 Earnings Miss Estimates, Revenues Match
Logitech reported mixed results in third-quarter fiscal 2023. The computer peripheral and software maker’s fiscal third-quarter non-GAAP earnings of $1.14 per share missed the Zacks Consensus Estimate of $1.15 per share and registered a year-over-year decline of 26%.
The dismal bottom line reflects lower revenues along with industry-wide elevated component costs and unfavorable currency movements. However, reduced operating expenses partially offset the negative impacts of the aforementioned factors.
Logitech’s fiscal third-quarter revenues plunged 22% year over year to $1.27 billion while matching the consensus mark of same. The decline can be attributed to a strong year-over-year comparison, where revenues fell only 2% in the third quarter of fiscal 2022.
In the past year, Logitech benefited from the elevated demand for its video collaboration, keyboards & combos and pointing device tools, mainly driven by the heightening of work-from-home and learn-from-home trends. Additionally, the demand for gaming products shot up because of the growing popularity of online video games and eSports amid the stay-at-home scenario. However, the demand softened due to the reopening of economic and business activities later on.
Segment Details
Logitech registered a sales decline across the majority of key product categories year over year.
Revenues from Pointing Devices dropped 14% year over year to $199.1 million, while Gaming revenues plunged 16% year over year to $392 million. Keyboards & Combos’ sales lost 22% to $220.1 million. Sales from PC Webcams were down 49% to $58.5 million, while Tablet and Other Accessories sales dipped 21% to $65.2 million.
Revenues from Video Collaboration also decreased 21% to $226.4 million. The Audio & Wearables segment’s sales declined 34% year over year to $69.1 million. Mobile Speakers’ sales fell 32% to $38.3 million. The Other segment’s sales plunged 71% year over year to $1.3 million.
Margins & Operating Metrics
The non-GAAP gross profit decreased 27.3% to $481.8 million from the year-ago quarter’s $662.9 million. The non-GAAP gross margin contracted 270 basis points from the prior-year quarter to 37.9%. The year-over-year decline was mainly due to increased component costs, higher logistics expenses and unfavorable currency movements.
Non-GAAP operating expenses declined 23% to $277.6 million. As a percentage of revenues, non-GAAP operating expenses shot down to 21.9% from the year-ago quarter’s figure of 22.1%.
The non-GAAP operating income plummeted 32% to $204.2 million from $302 million reported in the year-ago quarter. The operating margin declined to 16.1% from 18.5% in the year-ago quarter. The decline in profits mainly reflects reduced revenues and gross margins, partially offset by lower operating expenses.
Liquidity and Shareholder Return
As of Dec 31, 2022, LOGI’s cash and cash equivalents were $1.04 billion, up from $868.5 million recorded in the previous quarter. Additionally, the company generated $280 million in cash from operational activities in the third quarter.
In the third quarter of fiscal 2023, the company repurchased shares worth $90 million.
Fiscal 2023 Guidance
Considering the current macroeconomic challenges, LOGI revised its fiscal 2023 guidance.
Logitech now expects sales to decline between 15% and 13% in constant currency compared to prior estimate of a sales decline of 4-8%. Non-GAAP operating income is now anticipated in the range of $550-$600 million, down from the previous range of $650-$750 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -41.77% due to these changes.
VGM Scores
Currently, Logitech has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Logitech has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Logitech (LOGI) Down 5.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Logitech due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Logitech's Q3 Earnings Miss Estimates, Revenues Match
Logitech reported mixed results in third-quarter fiscal 2023. The computer peripheral and software maker’s fiscal third-quarter non-GAAP earnings of $1.14 per share missed the Zacks Consensus Estimate of $1.15 per share and registered a year-over-year decline of 26%.
The dismal bottom line reflects lower revenues along with industry-wide elevated component costs and unfavorable currency movements. However, reduced operating expenses partially offset the negative impacts of the aforementioned factors.
Logitech’s fiscal third-quarter revenues plunged 22% year over year to $1.27 billion while matching the consensus mark of same. The decline can be attributed to a strong year-over-year comparison, where revenues fell only 2% in the third quarter of fiscal 2022.
In the past year, Logitech benefited from the elevated demand for its video collaboration, keyboards & combos and pointing device tools, mainly driven by the heightening of work-from-home and learn-from-home trends. Additionally, the demand for gaming products shot up because of the growing popularity of online video games and eSports amid the stay-at-home scenario. However, the demand softened due to the reopening of economic and business activities later on.
Segment Details
Logitech registered a sales decline across the majority of key product categories year over year.
Revenues from Pointing Devices dropped 14% year over year to $199.1 million, while Gaming revenues plunged 16% year over year to $392 million. Keyboards & Combos’ sales lost 22% to $220.1 million. Sales from PC Webcams were down 49% to $58.5 million, while Tablet and Other Accessories sales dipped 21% to $65.2 million.
Revenues from Video Collaboration also decreased 21% to $226.4 million. The Audio & Wearables segment’s sales declined 34% year over year to $69.1 million. Mobile Speakers’ sales fell 32% to $38.3 million. The Other segment’s sales plunged 71% year over year to $1.3 million.
Margins & Operating Metrics
The non-GAAP gross profit decreased 27.3% to $481.8 million from the year-ago quarter’s $662.9 million. The non-GAAP gross margin contracted 270 basis points from the prior-year quarter to 37.9%. The year-over-year decline was mainly due to increased component costs, higher logistics expenses and unfavorable currency movements.
Non-GAAP operating expenses declined 23% to $277.6 million. As a percentage of revenues, non-GAAP operating expenses shot down to 21.9% from the year-ago quarter’s figure of 22.1%.
The non-GAAP operating income plummeted 32% to $204.2 million from $302 million reported in the year-ago quarter. The operating margin declined to 16.1% from 18.5% in the year-ago quarter. The decline in profits mainly reflects reduced revenues and gross margins, partially offset by lower operating expenses.
Liquidity and Shareholder Return
As of Dec 31, 2022, LOGI’s cash and cash equivalents were $1.04 billion, up from $868.5 million recorded in the previous quarter. Additionally, the company generated $280 million in cash from operational activities in the third quarter.
In the third quarter of fiscal 2023, the company repurchased shares worth $90 million.
Fiscal 2023 Guidance
Considering the current macroeconomic challenges, LOGI revised its fiscal 2023 guidance.
Logitech now expects sales to decline between 15% and 13% in constant currency compared to prior estimate of a sales decline of 4-8%. Non-GAAP operating income is now anticipated in the range of $550-$600 million, down from the previous range of $650-$750 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -41.77% due to these changes.
VGM Scores
Currently, Logitech has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Logitech has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.