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Why Is Logitech (LOGI) Up 21.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have added about 21.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Logitech due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Logitech's Q4 Earnings and Revenues Crush Estimates
Logitech ended fiscal 2024 on a strong note by reporting better-than-expected results in the fourth quarter. The computer peripheral and software maker’s fiscal fourth-quarter non-GAAP earnings of 99 cents per share beat the Zacks Consensus Estimate of 63 cents per share and registered a year-over-year increase of 98%. The company’s fourth-quarter bottom-line results mainly benefited from increased revenues, and lower product and logistics costs.
Logitech’s fiscal fourth-quarter revenues of $1.01 billion outpaced the consensus mark of $956.9 million. Moreover, the top line marked a year-over-year increase of 5% on a reported basis as well as on a constant-currency basis, mainly driven by increased demand across key product categories and lower inventory reductions by channel partners compared with the year-ago quarter.
The quarter marked the first year-over-year sales growth for Logitech after two and a half years of downturn post pandemic-driven boom. It has been reporting declining revenues on a year-over-year basis since October 2021.
In 2020 and 2021, LOGI benefited from the elevated demand for its video collaboration, keyboards & combos and pointing device tools, mainly driven by the heightening of work-from-home and learn-from-home trends.
Additionally, the demand for gaming products shot up due to the growing popularity of online video games and eSports amid the stay-at-home scenario. However, the demand softened due to the reopening of economic and business activities later on.
Segment Details
Logitech registered sales growth across the majority of key product categories year over year. In the first quarter of fiscal 2024, Logitech reclassified its product segments by removing the Audio & Wearable and Mobile Speakers categories and adding Headsets and Other categories.
Revenues from Keyboards & Combos improved 15% year over year to $216.2 million, while Gaming revenues increased 7% year over year to $273.5 million. Our model estimates for Keyboards & Combos and Gaming sales were pegged at $184 million and $251.8 million, respectively.
Revenues from the Headsets product category soared 16% to $45.5 million.
Pointing Devices grew 6% to $170.7 million, Webcams improved 4% to $76 million and Video Collaboration increased 3% to $148.1 million. Our model estimates for Headsets, Pointing Devices, Webcams and Video Collaboration were pegged at $34.9 million, $158.6 million, $73.7 million and $141.2 million, respectively.
On the other hand, Tablet Accessories’ sales plunged 18% to $55.8 million, while the Other category’s revenues fell 16% to $25.8 million. Our estimates for Logitech’s Tablet Accessories and Other product categories’ fourth-quarter revenues were pegged at $66.3 million and $33.9 million, respectively.
Margins & Operating Metrics
The non-GAAP gross profit jumped 26.5% to $441.4 million from $348.8 million in the year-ago quarter. The non-GAAP gross margin expanded 730 basis points (bps) from the prior-year quarter to 43.6%. The year-over-year increase was driven by lower product and logistics costs and reduced promotional activities, partially offset by an unfavorable product mix.
Non-GAAP operating expenses increased 6.1% to $282.8 million. As a percentage of revenues, non-GAAP operating expenses rose 20 bps to 28%.
The non-GAAP operating income soared 92.7% to $158.6 million from $82.3 million reported in the year-ago quarter. The operating margin improved 710 bps to 15.7% from 8.6% in the year-ago quarter. The increase in the operating margin mainly reflects improved gross margins, partially offset by higher operating expenses as a percentage of sales.
Fiscal 2024 Key Highlights
For fiscal 2024, the company reported revenues of $4.3 billion, which outpaced the Zacks Consensus Estimate of $4.24 billion as well as came ahead of management’s guidance range of $4.2-$4.25 billion. However, sales declined 5% on a reported basis and 6% on constant currency when compared with fiscal 2023 sales.
Non-GAAP earnings of $4.25 per share beat the consensus mark of $3.90 per share. The bottom line marked a year-over-year improvement of 32%.
Liquidity and Shareholder Return
As of Mar 31, 2024, LOGI’s cash and cash equivalents were $1.52 billion, up from $1.41 billion recorded in the previous quarter. Additionally, the company generated $239.1 million in cash from operational activities in the fourth quarter and $1.15 billion in fiscal 2024.
In the fourth quarter, the company repurchased shares worth $127.4 million but did not pay out dividends. In fiscal 2024, it bought back shares worth $504.2 million and paid $182.3 million in dividends.
Fiscal 2025 Guidance
Logitech expects fiscal 2025 sales in the band of $4.3-$4.4 billion, which indicates an increase of 0-2%. The company projects non-GAAP gross margin and non-GAAP operating expenses as a percentage of revenues to be 41% and 25%, respectively. The non-GAAP operating income is anticipated in the range of $685-$715 million.
Logitech forecasts a non-GAAP effective tax rate for fiscal 2025 to be approximately 12%. It estimates to incur approximately $70 million in capital expenditures and generate cash flow from operating activities equal to the non-GAAP operating income for the fiscal.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 11.6% due to these changes.
VGM Scores
At this time, Logitech has a great Growth Score of A, though it is lagging a lot 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Logitech (LOGI) Up 21.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Logitech (LOGI - Free Report) . Shares have added about 21.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Logitech due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Logitech's Q4 Earnings and Revenues Crush Estimates
Logitech ended fiscal 2024 on a strong note by reporting better-than-expected results in the fourth quarter. The computer peripheral and software maker’s fiscal fourth-quarter non-GAAP earnings of 99 cents per share beat the Zacks Consensus Estimate of 63 cents per share and registered a year-over-year increase of 98%. The company’s fourth-quarter bottom-line results mainly benefited from increased revenues, and lower product and logistics costs.
Logitech’s fiscal fourth-quarter revenues of $1.01 billion outpaced the consensus mark of $956.9 million. Moreover, the top line marked a year-over-year increase of 5% on a reported basis as well as on a constant-currency basis, mainly driven by increased demand across key product categories and lower inventory reductions by channel partners compared with the year-ago quarter.
The quarter marked the first year-over-year sales growth for Logitech after two and a half years of downturn post pandemic-driven boom. It has been reporting declining revenues on a year-over-year basis since October 2021.
In 2020 and 2021, LOGI benefited from the elevated demand for its video collaboration, keyboards & combos and pointing device tools, mainly driven by the heightening of work-from-home and learn-from-home trends.
Additionally, the demand for gaming products shot up due to the growing popularity of online video games and eSports amid the stay-at-home scenario. However, the demand softened due to the reopening of economic and business activities later on.
Segment Details
Logitech registered sales growth across the majority of key product categories year over year. In the first quarter of fiscal 2024, Logitech reclassified its product segments by removing the Audio & Wearable and Mobile Speakers categories and adding Headsets and Other categories.
Revenues from Keyboards & Combos improved 15% year over year to $216.2 million, while Gaming revenues increased 7% year over year to $273.5 million. Our model estimates for Keyboards & Combos and Gaming sales were pegged at $184 million and $251.8 million, respectively.
Revenues from the Headsets product category soared 16% to $45.5 million.
Pointing Devices grew 6% to $170.7 million, Webcams improved 4% to $76 million and Video Collaboration increased 3% to $148.1 million. Our model estimates for Headsets, Pointing Devices, Webcams and Video Collaboration were pegged at $34.9 million, $158.6 million, $73.7 million and $141.2 million, respectively.
On the other hand, Tablet Accessories’ sales plunged 18% to $55.8 million, while the Other category’s revenues fell 16% to $25.8 million. Our estimates for Logitech’s Tablet Accessories and Other product categories’ fourth-quarter revenues were pegged at $66.3 million and $33.9 million, respectively.
Margins & Operating Metrics
The non-GAAP gross profit jumped 26.5% to $441.4 million from $348.8 million in the year-ago quarter. The non-GAAP gross margin expanded 730 basis points (bps) from the prior-year quarter to 43.6%. The year-over-year increase was driven by lower product and logistics costs and reduced promotional activities, partially offset by an unfavorable product mix.
Non-GAAP operating expenses increased 6.1% to $282.8 million. As a percentage of revenues, non-GAAP operating expenses rose 20 bps to 28%.
The non-GAAP operating income soared 92.7% to $158.6 million from $82.3 million reported in the year-ago quarter. The operating margin improved 710 bps to 15.7% from 8.6% in the year-ago quarter. The increase in the operating margin mainly reflects improved gross margins, partially offset by higher operating expenses as a percentage of sales.
Fiscal 2024 Key Highlights
For fiscal 2024, the company reported revenues of $4.3 billion, which outpaced the Zacks Consensus Estimate of $4.24 billion as well as came ahead of management’s guidance range of $4.2-$4.25 billion. However, sales declined 5% on a reported basis and 6% on constant currency when compared with fiscal 2023 sales.
Non-GAAP earnings of $4.25 per share beat the consensus mark of $3.90 per share. The bottom line marked a year-over-year improvement of 32%.
Liquidity and Shareholder Return
As of Mar 31, 2024, LOGI’s cash and cash equivalents were $1.52 billion, up from $1.41 billion recorded in the previous quarter. Additionally, the company generated $239.1 million in cash from operational activities in the fourth quarter and $1.15 billion in fiscal 2024.
In the fourth quarter, the company repurchased shares worth $127.4 million but did not pay out dividends. In fiscal 2024, it bought back shares worth $504.2 million and paid $182.3 million in dividends.
Fiscal 2025 Guidance
Logitech expects fiscal 2025 sales in the band of $4.3-$4.4 billion, which indicates an increase of 0-2%. The company projects non-GAAP gross margin and non-GAAP operating expenses as a percentage of revenues to be 41% and 25%, respectively. The non-GAAP operating income is anticipated in the range of $685-$715 million.
Logitech forecasts a non-GAAP effective tax rate for fiscal 2025 to be approximately 12%. It estimates to incur approximately $70 million in capital expenditures and generate cash flow from operating activities equal to the non-GAAP operating income for the fiscal.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 11.6% due to these changes.
VGM Scores
At this time, Logitech has a great Growth Score of A, though it is lagging a lot 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Logitech has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.