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Here's Why You Should Give Zebra Technologies (ZBRA) a Miss Now

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Zebra Technologies (ZBRA - Free Report) is grappling with supply-chain disruptions, foreign currency headwinds and a softening demand environment.

Let’s discuss these factors in detail, which are weighing on this Zacks Rank #4 (Sell) company’s performance.

Persistent supply-chain challenges related to component shortages are disrupting Zebra Technologies’ operations, resulting in a decline in profits. The Enterprise Visibility & Mobility segment’s sales declined 8.8% year over year in the third quarter due to this headwind. Supply-chain constraints hurt North America and EMEA sales by 9% and 2%, respectively, in the third quarter.

Given Zebra Technologies’ wide international presence, foreign currency headwinds are affecting revenues. Foreign currency translation had an adverse impact of 2.9% on sales in the third quarter. For the fourth quarter, the company expects a negative impact of 4 percentage-point from currency headwinds. A stronger U.S. dollar might continue to depress the company’s overseas business results in the quarters ahead.

Zebra Technologies’ bearish outlook for the fourth quarter due to softening demand, continued supply-chain challenges and currency headwinds raise concerns. The company expects adjusted net sales to either decrease up to 2% or increase up to 1% for the ongoing quarter.

Due to these headwinds, shares of Zebra Technologies have lost 14.2% in the past six months compared with the industry’s decline of 12.2%.

Zacks Investment Research
Image Source: Zacks Investment Research


The negativity surrounding the stock is evident from the Zacks Consensus Estimate for 2022 and 2023 earnings being revised downward by 5.1% and 13.1% in the past 60 days, respectively.

Key Picks

Some better-ranked stocks within the broader Industrial Products sector are as follows:

Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). AIT delivered a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

Applied Industrial has an estimated earnings growth rate of 14.3% for the current fiscal year. The stock has gained 29.3% in the past six months.

Parker-Hannifin Corporation (PH - Free Report) currently carries a Zacks Rank of 2 (Buy). PH pulled off a trailing four-quarter earnings surprise of 11.3%, on average.

Parker-Hannifin has an estimated earnings growth rate of 2.2% for the current fiscal year. Shares of PH have rallied 14.3% in the past six months.

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