A month has gone by since the last earnings report for Zebra Technologies (ZBRA Quick QuoteZBRA - Free Report) . Shares have lost about 9.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Zebra 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.

Zebra Q1 Earnings & Revenues Surpass Estimates

Zebra Technologies Corporation reported solid first-quarter 2022 results, with earnings and sales surpassing estimates by 4.7% and 4.2%, respectively.

ZBRA’s adjusted earnings per share in the reported quarter came in at $4.01, outpacing the Zacks Consensus Estimate of $3.83. The bottom line decreased 16.3% on a year-over-year basis.

Revenue & Segmental Performance

In the first quarter, Zebra generated net sales of $1,432 million, reflecting a year-over-year increase of 6.3%. The improvement was driven by a 5.4% increase in organic sales, a 1% contribution from acquisitions and movements in foreign currencies had an adverse impact of 0.1%. The top line surpassed the Zacks Consensus Estimate of $1,374 million.

ZBRA reports revenues under the segments discussed below:

Revenues from the Asset Intelligence & Tracking segment were $394 million, down 8.2% year over year. The decrease was driven by an 8.1% fall in organic sales and a 0.1% gain from movements in foreign currencies.

The Enterprise Visibility & Mobility segment’s revenues were $1,038 million, up 12.7% year over year. The results benefited from 11.6% growth in organic sales and a 0.1% gain from movements in foreign currencies. However, acquisitions had an adverse impact of 1.2%.

Margin Profile

In the first quarter, Zebra’s cost of sales totaled $795 million, reflecting a rise of 14.9% from the year-ago quarter’s level. Total operating expenses were $425 million, up 11%.

Net income in the reported quarter decreased 10.1% year over year to $205 million while adjusted margin declined 260 basis points to 14.3%.

Balance Sheet and Cash Flow

Exiting the first quarter, Zebra had cash and cash equivalents of $141 million, down 57.5% from $332 million recorded at the end of the prior quarter. Long-term debt was down 1% sequentially to $913 million.

In the first three months of 2022, ZBRA generated net cash of $54 million from operating activities compared with $224 million in the previous year. In the first three months of 2022, its net debt borrowings totaled $105 million, and interest payments were $8 million. Capital expenditure was $14 million. Free cash flow was $40 million compared with $214 reported in the year-ago quarter.

Outlook

For the second quarter of 2022, Zebra estimates adjusted net sales to grow 3-7% on a year-over-year basis. Adjusted earnings are projected in the range of $4.05-$4.35. Adjusted effective tax rate is likely to be about 18%.

For 2022, Zebra anticipates adjusted net sales to grow 3-7% year over year. It expects free cash flow to be minimum $800 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -9.09% due to these changes.

VGM Scores

At this time, Zebra has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. 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 D. 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, Zebra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.