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Zebra expects Q4 sales growth of 10-14% and at least $1 billion in 2026 free cash flow.
Zebra Technologies Corporation (ZBRA - Free Report) reported third-quarter 2026 non-GAAP earnings of $4.95 per share, beating the Zacks Consensus Estimate of $4.90 by 1.0%. The bottom line increased 27.6% from $3.88 per share in the year-ago quarter.
Net sales of $1.61 billion surpassed the consensus estimate of $1.56 billion by 3.2%. Revenues grew 22.3% year over year, reflecting growth across both segments. Consolidated organic net sales increased 11.3%, supported by demand for automation and frontline productivity solutions.
ZBRA's Connected Frontline Sales Drive Growth
Connected Frontline segment revenues increased to $949 million from $705 million in the year-ago quarter, representing growth of 34.6%. The segment accounted for the larger share of Zebra Technologies' consolidated third-quarter sales.
Organic net sales in Connected Frontline rose 15.0% year over year. Management highlighted the contribution from Elo Touch and customers' investments in automating frontline operations. These factors supported the segment's reported and underlying sales expansion.
Zebra Technologies' Asset Visibility Business Expands
Asset Visibility & Automation segment sales totaled $665 million, up 8.1% from $615 million in the prior-year quarter. The business also contributed to Zebra Technologies' consolidated revenue growth, although its reported growth was slower than that of Connected Frontline.
Organic net sales in Asset Visibility & Automation increased 7.0% year over year. Growth in both operating segments underscored the breadth of demand, while the difference in their organic growth rates showed that the momentum was stronger in Connected Frontline.
Zebra Technologies Corporation Price, Consensus and EPS Surprise
Third-quarter gross profit totaled $738 million compared with $634 million a year earlier. However, gross margin contracted to 45.7% from 48.0%, primarily due to higher memory component costs and an unfavorable business mix. Favorable foreign currency movements partly offset these pressures.
Adjusted gross margin declined to 46.0% from 48.2% in the year-ago quarter. The company said it was strengthening memory supply and implementing pricing actions while capturing operating leverage to support growth and profitability amid component cost pressures.
Zebra Technologies' Expenses and Profitability
Operating expenses increased to $501 million from $451 million in the year-ago quarter, mainly due to expenses associated with acquired businesses, including amortization of intangible assets. Adjusted operating expenses rose to $413 million from $368 million.
Reported net income increased to $164 million, or $3.43 per diluted share, from $101 million, or $1.97 per diluted share, a year ago. Non-GAAP net income grew to $237 million from $198 million. Adjusted EBITDA increased to $349 million from $285 million, while its margin remained unchanged at 21.6%.
ZBRA's Balance Sheet and Cash Generation
Zebra Technologies exited the third quarter with cash and cash equivalents of $182 million as of Oct. 3, 2026. Total debt was $2.58 billion. The company continued to deploy capital toward growth opportunities and shareholder returns.
During the first nine months of 2026, cash generated from operating activities was $711 million. Capital expenditures amounted to $50 million, resulting in free cash flow of $661 million. Share repurchases totaled $643 million over the same period, including $75 million in the third quarter.
Zebra Technologies' Fourth-Quarter Outlook and Capital Plans
For the fourth quarter of 2026, Zebra Technologies expects sales growth of 10-14% year over year, including an approximately 150-basis-point favorable impact from foreign currency translation. The company projects an adjusted EBITDA margin of approximately 22%.
Non-GAAP earnings are anticipated to range from $5.00 to $5.40 per share, based on an adjusted effective tax rate of approximately 19%. Zebra Technologies raised its full-year outlook and continues to expect free cash flow of at least $1 billion for 2026. Management cited operating productivity, continued customer demand and automation trends as factors supporting its outlook.
ZBRA’s Zacks Rank
The company currently carries a Zacks Rank #2 (Buy).
In the third quarter of 2026, Graco Inc. (GGG - Free Report) came out with quarterly earnings of $0.81 per share, missing the Zacks Consensus Estimate of $0.82 per share. This compares with earnings of $0.73 per share a year ago.
Graco reported revenues of $586.39 million in the quarter ended September 2026, missing the Zacks Consensus Estimate by 0.58%. This compares with year-ago revenues of $543.36 million.
Dover Corporation (DOV - Free Report) has reported third-quarter 2026 adjusted earnings of $2.88 per share, rising 10% year over year and beating the Zacks Consensus Estimate of $2.83 by 1.77%. The improvement reflected broad-based demand, higher revenues and operational execution.
Revenues increased 7.5% year over year to $2.23 billion, beating the Zacks Consensus Estimate of $2.20 billion by 1.47%. Organic revenues grew 7.1%. Our model expected organic revenues to rise 4%.
Allegion plc (ALLE - Free Report) reported third-quarter 2026 adjusted earnings of $2.60 per share, up 13% year over year. The figure beat the Zacks Consensus Estimate of $2.49 by 4.4%, supported by strong organic growth and margin expansion.
Revenues increased 9.6% year over year to $1.17 billion, beating the Zacks Consensus Estimate of $1.13 billion by 3.4%. Organic revenues grew 7.2%, driven by strength in the Americas non-residential business, volume growth and price realization.
View the Zacks #1 Rank List
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ZBRA Q3 Earnings Beat Estimates on Broad-Based Sales Growth
Key Takeaways
Zebra Technologies Corporation (ZBRA - Free Report) reported third-quarter 2026 non-GAAP earnings of $4.95 per share, beating the Zacks Consensus Estimate of $4.90 by 1.0%. The bottom line increased 27.6% from $3.88 per share in the year-ago quarter.
Net sales of $1.61 billion surpassed the consensus estimate of $1.56 billion by 3.2%. Revenues grew 22.3% year over year, reflecting growth across both segments. Consolidated organic net sales increased 11.3%, supported by demand for automation and frontline productivity solutions.
ZBRA's Connected Frontline Sales Drive Growth
Connected Frontline segment revenues increased to $949 million from $705 million in the year-ago quarter, representing growth of 34.6%. The segment accounted for the larger share of Zebra Technologies' consolidated third-quarter sales.
Organic net sales in Connected Frontline rose 15.0% year over year. Management highlighted the contribution from Elo Touch and customers' investments in automating frontline operations. These factors supported the segment's reported and underlying sales expansion.
Zebra Technologies' Asset Visibility Business Expands
Asset Visibility & Automation segment sales totaled $665 million, up 8.1% from $615 million in the prior-year quarter. The business also contributed to Zebra Technologies' consolidated revenue growth, although its reported growth was slower than that of Connected Frontline.
Organic net sales in Asset Visibility & Automation increased 7.0% year over year. Growth in both operating segments underscored the breadth of demand, while the difference in their organic growth rates showed that the momentum was stronger in Connected Frontline.
Zebra Technologies Corporation Price, Consensus and EPS Surprise
Zebra Technologies Corporation price-consensus-eps-surprise-chart | Zebra Technologies Corporation Quote
ZBRA's Gross Margin Faces Cost Pressure
Third-quarter gross profit totaled $738 million compared with $634 million a year earlier. However, gross margin contracted to 45.7% from 48.0%, primarily due to higher memory component costs and an unfavorable business mix. Favorable foreign currency movements partly offset these pressures.
Adjusted gross margin declined to 46.0% from 48.2% in the year-ago quarter. The company said it was strengthening memory supply and implementing pricing actions while capturing operating leverage to support growth and profitability amid component cost pressures.
Zebra Technologies' Expenses and Profitability
Operating expenses increased to $501 million from $451 million in the year-ago quarter, mainly due to expenses associated with acquired businesses, including amortization of intangible assets. Adjusted operating expenses rose to $413 million from $368 million.
Reported net income increased to $164 million, or $3.43 per diluted share, from $101 million, or $1.97 per diluted share, a year ago. Non-GAAP net income grew to $237 million from $198 million. Adjusted EBITDA increased to $349 million from $285 million, while its margin remained unchanged at 21.6%.
ZBRA's Balance Sheet and Cash Generation
Zebra Technologies exited the third quarter with cash and cash equivalents of $182 million as of Oct. 3, 2026. Total debt was $2.58 billion. The company continued to deploy capital toward growth opportunities and shareholder returns.
During the first nine months of 2026, cash generated from operating activities was $711 million. Capital expenditures amounted to $50 million, resulting in free cash flow of $661 million. Share repurchases totaled $643 million over the same period, including $75 million in the third quarter.
Zebra Technologies' Fourth-Quarter Outlook and Capital Plans
For the fourth quarter of 2026, Zebra Technologies expects sales growth of 10-14% year over year, including an approximately 150-basis-point favorable impact from foreign currency translation. The company projects an adjusted EBITDA margin of approximately 22%.
Non-GAAP earnings are anticipated to range from $5.00 to $5.40 per share, based on an adjusted effective tax rate of approximately 19%. Zebra Technologies raised its full-year outlook and continues to expect free cash flow of at least $1 billion for 2026. Management cited operating productivity, continued customer demand and automation trends as factors supporting its outlook.
ZBRA’s Zacks Rank
The company currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Companies
In the third quarter of 2026, Graco Inc. (GGG - Free Report) came out with quarterly earnings of $0.81 per share, missing the Zacks Consensus Estimate of $0.82 per share. This compares with earnings of $0.73 per share a year ago.
Graco reported revenues of $586.39 million in the quarter ended September 2026, missing the Zacks Consensus Estimate by 0.58%. This compares with year-ago revenues of $543.36 million.
Dover Corporation (DOV - Free Report) has reported third-quarter 2026 adjusted earnings of $2.88 per share, rising 10% year over year and beating the Zacks Consensus Estimate of $2.83 by 1.77%. The improvement reflected broad-based demand, higher revenues and operational execution.
Revenues increased 7.5% year over year to $2.23 billion, beating the Zacks Consensus Estimate of $2.20 billion by 1.47%. Organic revenues grew 7.1%. Our model expected organic revenues to rise 4%.
Allegion plc (ALLE - Free Report) reported third-quarter 2026 adjusted earnings of $2.60 per share, up 13% year over year. The figure beat the Zacks Consensus Estimate of $2.49 by 4.4%, supported by strong organic growth and margin expansion.
Revenues increased 9.6% year over year to $1.17 billion, beating the Zacks Consensus Estimate of $1.13 billion by 3.4%. Organic revenues grew 7.2%, driven by strength in the Americas non-residential business, volume growth and price realization.