It has been about a month since the last earnings report for Zebra Technologies (ZBRA Quick QuoteZBRA - Free Report) . Shares have added about 1.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Zebra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Zebra Technologies Q1 Earnings Surpass Estimates

Zebra Technologies reported first-quarter 2023 adjusted earnings of $3.59 per share, beating the Zacks Consensus Estimate of earnings of $3.55 per share. The bottom line decreased 4.5% year over year.

Total revenues of $1,405 million beat the Zacks Consensus Estimate of $1,392 million. The top line decreased 1.9% year over year. Consolidated organic net sales decreased 0.3% year over year. Acquisitions contributed 1.5% to the top line, while foreign-currency translation had an adverse impact of 3.1% on sales.

Segmental Performance

Revenues from the Asset Intelligence & Tracking segment were $491 million, up 24.6% year over year. Organic net sales increased 28.4% in the AIT segment. Foreign-currency translation hurt segmental revenues by 3.8%.

The Enterprise Visibility & Mobility segment’s revenues were $914 million, down 12% year over year. Organic net sales declined 11.2%. Acquisitions contributed 2% to segmental revenues, while foreign-currency translations hurt revenues by 2.7%.

Margin Profile

In the first quarter, Zebra Technologies’ cost of sales totaled $738 million, down 7.2% year over year. Total operating expenses were $442 million, up 4% year over year.

ZBRA reported a net income of $150 million in the first quarter, reflecting a decrease of 26.8%.

Balance Sheet and Cash Flow

Exiting the first quarter, Zebra Technologies had cash and cash equivalents of $85 million, compared with $105 million at the end of December 2022. Long-term debt was $1,880 million, compared with $1,809 million at the end of December 2022.

In the first three months of 2023, Zebra Technologies used net cash of $76 million in operating activities against $54 million in cash generated at the end of the year-ago period. In the same time period, the company incurred capital expenditures of $16 million, while free cash outflow was $92 million.  The company repurchased shares worth $15 million in the quarter.

2023 Outlook

Zebra Technologies expects second-quarter 2023 adjusted net sales to decrease 9-11%. The company expects a 1 percentage-point positive impact from acquired assets and an approximate 2 percentage-point adversity from foreign-currency translation.

ZBRA expects an adjusted EBITDA margin of 20% for the second quarter. The company anticipates an adjusted effective tax rate of approximately 19% for the ongoing quarter. Adjusted earnings are predicted to be in the band of $3.20-$3.40.

For 2023, the company expects adjusted net sales to decrease between 2% and 6%. The company expects a 0.5 percentage-point positive impact from acquired assets and an approximate 1 percentage-point adversity from foreign-currency translation.

ZBRA expects an adjusted EBITDA margin of approximately 22%, which includes about $40 million of premium supply-chain expenses. Free cash flow is expected to be $450-$550 million, inclusive of the anticipated $180 million of previously announced settlement payments.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -22.24% due to these changes.

VGM Scores

Currently, Zebra has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. 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 Zebra has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Zebra is part of the Zacks Manufacturing - Thermal Products industry. Over the past month, John Bean , a stock from the same industry, has gained 0.2%. The company reported its results for the quarter ended March 2023 more than a month ago.

JBT reported revenues of $529.5 million in the last reported quarter, representing a year-over-year change of +12.9%. EPS of $0.94 for the same period compares with $0.87 a year ago.

JBT is expected to post earnings of $1.22 per share for the current quarter, representing a year-over-year change of +8%. Over the last 30 days, the Zacks Consensus Estimate has changed +1%.

JBT has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.