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Here's Why You Should Hold Zebra (ZBRA) in Your Portfolio
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Zebra Technologies Corporation (ZBRA - Free Report) has been benefiting from improving supply chains and reduced product lead times of late. Targeted list price increases and higher sales of radio frequency identification devices (“RFID”) products are aiding the company’s Asset Intelligence and Tracking segment. Higher sales of services and software and contributions from recent acquisitions bode well for the Enterprise Visibility & Mobility segment.
The firm remains focused on acquiring businesses to gain new customers and access new regions and product lines. For instance, it acquired Matrox Imaging in June 2022, which enabled ZBRA to combine its fixed industrial scanning and machine vision portfolio with Matrox Imaging’s expertise in the imaging market. Zebra Technologies also remains focused on cost-management actions. In the second quarter of 2023, it announced an expanded cost-reduction program, which is expected to help it generate approximately $100 million in cost savings annually.
ZBRA has been committed to increasing shareholders’ value through share repurchases. For instance, in the first nine months of 2023, it repurchased shares worth $52 million. Although the company’s free cash flow was negative in the first nine months of 2023, it expects the same to be positive in the fourth quarter. This should support its shareholder-friendly policies.
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 15.8% compared with the industry’s 10.6% growth.
Despite the positives, low demand across end markets is taking a toll on Zebra Technologies’ operations. Demand is especially weak in the retail, e-commerce and transportation logistics markets. Due to these headwinds, as well as a significant reduction in demand in the mobile computing and printing market, Zebra Technologies expects its revenues to decline year-over-year in the fourth quarter.
Also, its weak liquidity position remains concerning. Exiting the third quarter, the company’s cash and cash equivalents were $68 million, less than its current portion of long-term debt of $152 million. This implies that ZBRA does not have sufficient cash to meet its current debt obligations.
Lakeland Industries has a trailing four-quarter average earnings surprise of 38.4%. The consensus estimate for LAKE’s 2023 earnings has increased 8.6% in the past 60 days. Shares of the company have rallied 17.4% in the past three months.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has remained stable. The stock has rallied 31.8% in the past three months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has increased 1% in the past 60 days. Shares of the company have increased 3.8% in the past three months.
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Here's Why You Should Hold Zebra (ZBRA) in Your Portfolio
Zebra Technologies Corporation (ZBRA - Free Report) has been benefiting from improving supply chains and reduced product lead times of late. Targeted list price increases and higher sales of radio frequency identification devices (“RFID”) products are aiding the company’s Asset Intelligence and Tracking segment. Higher sales of services and software and contributions from recent acquisitions bode well for the Enterprise Visibility & Mobility segment.
The firm remains focused on acquiring businesses to gain new customers and access new regions and product lines. For instance, it acquired Matrox Imaging in June 2022, which enabled ZBRA to combine its fixed industrial scanning and machine vision portfolio with Matrox Imaging’s expertise in the imaging market.
Zebra Technologies also remains focused on cost-management actions. In the second quarter of 2023, it announced an expanded cost-reduction program, which is expected to help it generate approximately $100 million in cost savings annually.
ZBRA has been committed to increasing shareholders’ value through share repurchases. For instance, in the first nine months of 2023, it repurchased shares worth $52 million. Although the company’s free cash flow was negative in the first nine months of 2023, it expects the same to be positive in the fourth quarter. This should support its shareholder-friendly policies.
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 15.8% compared with the industry’s 10.6% growth.
Despite the positives, low demand across end markets is taking a toll on Zebra Technologies’ operations. Demand is especially weak in the retail, e-commerce and transportation logistics markets. Due to these headwinds, as well as a significant reduction in demand in the mobile computing and printing market, Zebra Technologies expects its revenues to decline year-over-year in the fourth quarter.
Also, its weak liquidity position remains concerning. Exiting the third quarter, the company’s cash and cash equivalents were $68 million, less than its current portion of long-term debt of $152 million. This implies that ZBRA does not have sufficient cash to meet its current debt obligations.
3 Promising Stocks
We have highlighted three better-ranked stocks from the Zacks Industrial Products sector, namely Lakeland Industries (LAKE - Free Report) , Crane Company (CR - Free Report) and Flowserve Corporation (FLS - Free Report) . While Lakeland Industries sports a Zacks Rank #1 (Strong Buy), Crane and Flowserve each carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lakeland Industries has a trailing four-quarter average earnings surprise of 38.4%. The consensus estimate for LAKE’s 2023 earnings has increased 8.6% in the past 60 days. Shares of the company have rallied 17.4% in the past three months.
Crane delivered a trailing four-quarter average earnings surprise of 29.8%. In the past 60 days, the Zacks Consensus Estimate for CR’s 2023 earnings has remained stable. The stock has rallied 31.8% in the past three months.
Flowserve has a trailing four-quarter average earnings surprise of 27.3%. The consensus estimate for FLS’ 2023 earnings has increased 1% in the past 60 days. Shares of the company have increased 3.8% in the past three months.