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Logitech (LOGI) Down 9.8% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have lost about 9.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Logitech Q3 Earnings & Revenues Top Estimates
Logitech reported third-quarter fiscal 2020 results, wherein both bottom and top lines surpassed estimates.
Non-GAAP earnings came in at 84 cents per share, surpassing the Zacks Consensus Estimate of 77 cents. The bottom line also improved from the year-ago quarter’s 79 cents.
Net sales of $903 million surpassed the consensus mark of $899 million and rose 4% year over year in dollars and 5% at constant currency. The year-over-year increase stemmed from strong growth in Gaming, Video Collaboration and PC peripheral segments.
Segmental Details
Logitech’s Gaming segment’s sales grew 15% year over year to $245.74 million.
Video Collaboration sales witnessed a 24% rally to $91.96 million.
Mobile Speakers’ sales, however, fell 3% to $92.97 million.
Audio & Wearables segment sales declined 17% year over year to reach $81.93 million. Smart Home segment sales fell 19% year over year to $15.79 million.
Logitech’s Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Revenues from Pointing Devices, and Keyboards and Combos grew 4% and 8% year over year, respectively. However, revenues from PC Webcams, and Tablet and Other Accessories declined 3% and 13%, respectively.
The company did not report any revenues from the Other segment in the quarter.
Margins & Operating Metrics
Non-GAAP gross profit rose 3% year over year to $339.61 million. Non-GAAP gross margin, however, contracted 50 basis points (bps) from the year-ago quarter to 37.6%. The impact of tariffs remained an overhang on margins.
Non-GAAP operating expenses inched up 0.8% to $187.97 million.
Non-GAAP operating income climbed 5.9% to $151.65 million. Operating margin of 16.8% expanded 20 bps.
Liquidity
As of Dec 31, 2019, Logitech’s cash and cash equivalents were $656.05 million compared with $574.5 million in the previous quarter.
Additionally, the company generated operating cash flow of $181.12 million in the fiscal third quarter compared with $106.5 million in the prior quarter.
Guidance
Logitech reaffirmed view for fiscal 2020. The company expects non-GAAP operating income of $375-$385 million.
Revenue growth is anticipated in the mid to high-single-digit range at constant currency.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Logitech has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. 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. Notably, Logitech has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Logitech (LOGI) Down 9.8% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have lost about 9.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Logitech Q3 Earnings & Revenues Top Estimates
Logitech reported third-quarter fiscal 2020 results, wherein both bottom and top lines surpassed estimates.
Non-GAAP earnings came in at 84 cents per share, surpassing the Zacks Consensus Estimate of 77 cents. The bottom line also improved from the year-ago quarter’s 79 cents.
Net sales of $903 million surpassed the consensus mark of $899 million and rose 4% year over year in dollars and 5% at constant currency. The year-over-year increase stemmed from strong growth in Gaming, Video Collaboration and PC peripheral segments.
Segmental Details
Logitech’s Gaming segment’s sales grew 15% year over year to $245.74 million.
Video Collaboration sales witnessed a 24% rally to $91.96 million.
Mobile Speakers’ sales, however, fell 3% to $92.97 million.
Audio & Wearables segment sales declined 17% year over year to reach $81.93 million. Smart Home segment sales fell 19% year over year to $15.79 million.
Logitech’s Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Revenues from Pointing Devices, and Keyboards and Combos grew 4% and 8% year over year, respectively. However, revenues from PC Webcams, and Tablet and Other Accessories declined 3% and 13%, respectively.
The company did not report any revenues from the Other segment in the quarter.
Margins & Operating Metrics
Non-GAAP gross profit rose 3% year over year to $339.61 million. Non-GAAP gross margin, however, contracted 50 basis points (bps) from the year-ago quarter to 37.6%. The impact of tariffs remained an overhang on margins.
Non-GAAP operating expenses inched up 0.8% to $187.97 million.
Non-GAAP operating income climbed 5.9% to $151.65 million. Operating margin of 16.8% expanded 20 bps.
Liquidity
As of Dec 31, 2019, Logitech’s cash and cash equivalents were $656.05 million compared with $574.5 million in the previous quarter.
Additionally, the company generated operating cash flow of $181.12 million in the fiscal third quarter compared with $106.5 million in the prior quarter.
Guidance
Logitech reaffirmed view for fiscal 2020. The company expects non-GAAP operating income of $375-$385 million.
Revenue growth is anticipated in the mid to high-single-digit range at constant currency.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Logitech has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. 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. Notably, Logitech has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.