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Here's Why You Should Hold Zebra Stock in Your Portfolio Now
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Zebra Technologies Corporation (ZBRA - Free Report) has been witnessing growth across the Enterprise Visibility & Mobility segment. Higher sales of mobile computing products are aiding the segment’s revenues, which increased 8.6% year over year in the second quarter of 2024.
The company has also been advancing digital capabilities, optimizing the supply chain, expanding its data analytics capability and focusing on marketing activities to better engage with customers. Driven by these initiatives and a modest demand environment, it expects 2024 net sales to increase in the band of 4-7% year over year.
The company intends to strengthen and expand its businesses through acquisitions. ZBRA’s acquisition of Matrox Imaging (June 2022) enabled it to combine its fixed industrial scanning and machine vision portfolio with the latter’s expertise in the imaging market. The buyout of antuit.ai (October 2021) complemented the planning and demand forecasting module for its retail software portfolio. Also, the Fetch Robotics buyout (August 2021) boosted its capability to offer a comprehensive line of advanced robotics solutions to customers.
Zebra remains focused on cost-management actions. In the second quarter, its gross margin increased 50 basis points to 48.4%, supported by lower freight costs. Recently, the company substantially completed the actions under its 2022 productivity plan and employee voluntary retirement plan.
These actions impacted more than 9% of its global employee base, which is likely to generate annualized net cost savings of about $120 million. These efforts are likely to boost margins and produce more fuel to invest in organic growth.
ZBRA Stock’s Price Performance
Image Source: Zacks Investment Research
In the past year, this Zacks Rank #3 (Hold) company has gained 26.5% compared with the industry’s 21.2% growth.
However, the company has been bearing the brunt of weak demand for printing solutions and RFID products. This has been affecting the performance of its Asset Intelligence & Tracking segment, whose sales declined 13.5% in the second quarter on a year-over-year basis.
Also, high debt levels remain a major concern. Exiting the second quarter, the company’s long-term debt totaled $2.08 billion. Considering ZBRA’s high debt level, its cash and cash equivalents of $411 million do not look impressive.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below.
The Zacks Consensus Estimate for FLS’ 2024 earnings has increased 3.8% in the past 60 days.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Ferguson Enterprises Inc. (FERG - Free Report) currently carries a Zacks Rank of 2. FERG delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Ferguson’s fiscal 2025 earnings has remained steady.
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Here's Why You Should Hold Zebra Stock in Your Portfolio Now
Zebra Technologies Corporation (ZBRA - Free Report) has been witnessing growth across the Enterprise Visibility & Mobility segment. Higher sales of mobile computing products are aiding the segment’s revenues, which increased 8.6% year over year in the second quarter of 2024.
The company has also been advancing digital capabilities, optimizing the supply chain, expanding its data analytics capability and focusing on marketing activities to better engage with customers. Driven by these initiatives and a modest demand environment, it expects 2024 net sales to increase in the band of 4-7% year over year.
The company intends to strengthen and expand its businesses through acquisitions. ZBRA’s acquisition of Matrox Imaging (June 2022) enabled it to combine its fixed industrial scanning and machine vision portfolio with the latter’s expertise in the imaging market. The buyout of antuit.ai (October 2021) complemented the planning and demand forecasting module for its retail software portfolio. Also, the Fetch Robotics buyout (August 2021) boosted its capability to offer a comprehensive line of advanced robotics solutions to customers.
Zebra remains focused on cost-management actions. In the second quarter, its gross margin increased 50 basis points to 48.4%, supported by lower freight costs. Recently, the company substantially completed the actions under its 2022 productivity plan and employee voluntary retirement plan.
These actions impacted more than 9% of its global employee base, which is likely to generate annualized net cost savings of about $120 million. These efforts are likely to boost margins and produce more fuel to invest in organic growth.
ZBRA Stock’s Price Performance
Image Source: Zacks Investment Research
In the past year, this Zacks Rank #3 (Hold) company has gained 26.5% compared with the industry’s 21.2% growth.
However, the company has been bearing the brunt of weak demand for printing solutions and RFID products. This has been affecting the performance of its Asset Intelligence & Tracking segment, whose sales declined 13.5% in the second quarter on a year-over-year basis.
Also, high debt levels remain a major concern. Exiting the second quarter, the company’s long-term debt totaled $2.08 billion. Considering ZBRA’s high debt level, its cash and cash equivalents of $411 million do not look impressive.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below.
Flowserve Corporation (FLS - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 18.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for FLS’ 2024 earnings has increased 3.8% in the past 60 days.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the Zacks Consensus Estimate for CR’s 2024 earnings has increased 2%.
Ferguson Enterprises Inc. (FERG - Free Report) currently carries a Zacks Rank of 2. FERG delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Ferguson’s fiscal 2025 earnings has remained steady.