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Why Is Zebra (ZBRA) Down 2.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Zebra Technologies (ZBRA - Free Report) . Shares have lost about 2.1% 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 catalysts.

Zebra Technologies Q2 Earnings & Revenues Top Estimates

Zebra Technologies reported second-quarter 2024 adjusted earnings of $3.18 per share, which surpassed the Zacks Consensus Estimate of $2.82. However, the bottom line fell 3.3% year over year.

Total revenues of $1.22 billion surpassed the consensus estimate of $1.18 billion. The top line inched up 0.2% year over year driven by strength in Enterprise Visibility & Mobility unit. Consolidated organic net sales declined 0.3% year over year.

Segmental Performance

Revenues from the Asset Intelligence & Tracking (“AIT”) segment declined 13.5% year over year to $397 million. The decline was attributable to a decrease in sales of printing and RFID products. The Zacks Consensus Estimate for segmental revenues was pegged at $392 million. Organic net sales decreased 14.4%. Foreign-currency translation had a positive impact of 0.9% on segmental revenues.

The Enterprise Visibility & Mobility segment’s revenues totaled $820 million, up 8.6% year over year. The improvement was driven by increased sales of mobile computing products, partially offset by lower sales of data capture products. The consensus estimate for segmental revenues was pegged at $786.2 million. Organic net sales increased 8.2%. Foreign-currency translation had a positive impact of 0.4%.

Margin Profile

In the second quarter, Zebra Technologies’ cost of sales totaled $628 million, down 0.8% year over year. Total operating expenses increased 9% year over year to $422 million.

The company reported a net income of $113 million compared with $144 million in the year-ago period.

Balance Sheet and Cash Flow

Zebra Technologies had cash and cash equivalents of $411 million at the end of the second quarter compared with $137 million at the end of December 2023. Long-term debt totaled $2.08 billion compared with $2.05 billion at the end of December 2023.

In the first six months of 2024, Zebra Technologies generated net cash of $413 million in operating activities against $110 million cash used at the end of the year-ago period. The company incurred a capital expenditure of $24 million in the same time frame. Free cash inflow amounted to $389 million against free cash outflow of $144 million in the year-ago period.

Guidance

For the third quarter, Zebra Technologies expects net sales to increase 25-28% year over year. Foreign-currency translation is anticipated to have a favorable impact of 1%.

Adjusted EBITDA margin is anticipated to be in the range of 20-21%. Adjusted earnings per share (EPS) are expected to be in the band of $3.00-$3.30.

For 2024, the company expects net sales to increase 4-7% from the prior-year level. Adjusted EPS is anticipated to be in the range of $12.30-$12.90. The effective tax rate is expected to be 17%. The adjusted EBITDA margin is anticipated to be between 20% and 21%. It expects free cash flow to be at least $700 million. Capital expenditures are projected to be in the range of $60–$70 million.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted 10.01% due to these changes.

VGM Scores

At this time, Zebra has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Zebra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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