Zebra Technologies Corp (ZBRA-Q)

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

EPS of $1.71 beat estimates of $1.65; revenue of $1B was 1.3% better than expected. The outlook was quite solid. Revenue has solidly improved from the Q3 bottom and channel inventories are lower, suggesting future demand strength. 2024 sales growth is still low (1% to 3%) but earnings are recovering much faster, with better margins and lower tax rates. We think the pop was justified. 
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Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

ZBRA's share price has been falling alongside the market so far in September, but this has been somewhat exacerbated by a rating downgrade by Morgan Stanley. We do not feel that anything has fundamentally changed, and its weakness is similar to many names in today's market. It trades at a somewhat premium valuation, with a forward P/E of ~30X, and has decent margins, but sales growth has been somewhat muted recently and investors are likely trying to connect its premium valuation to sales growth. Earnings growth is expected to be strong in the coming years, and we like it for the industrial robotic side of things. We are comfortable with the name, especially for a long-term hold, but we might expect some further downside pressure as it retests its lows of ~$230. 
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(A Top Pick Apr 21/22, Down 22%)

Likes the story, because e-commerce will continue to grow. Grew rapidly through Covid, and that growth is now being digested. Good time to buy. Company's not going away. Product needed, as it's all about logistics.

(A Top Pick Mar 16/22, Down 25%)

Integral to e-commerce. Grew rapidly through Covid. Key for inventory management. E-commerce is settling down, but isn't going away. Debt-free by end of year. Great story at these levels. Really well run.

(A Top Pick Mar 16/22, Down 23%) High multiple stock and tech has been difficult. Customers that over-expanded during Covid got hurt, so this got hurt too. Wisely used balance sheet to make acquisitions at discounts. E-commerce isn't going away. Will be debt-free by end of this year. Great free cashflow growth.

Interesting company that is diversified away from 1 product. Does logistics for broad range of sectors. Cost savings that company offers to customers is compelling. Nature of product (barcode readers) repeatable business that will be sticky.

Play on e-commerce, which will continue to grow. Trades at 23x earnings, off its highs. Good free cashflow growth, very good balance sheet. Should grow aggressively over the next while. No dividend. (Analysts’ price target is $547.55)

Automation in e-commerce and in factories. Strong growth areas. Good acquisitions. Big player in barcodes. More of a pure play than HON. Dropped from its high, good chance to buy, though not cheap at 25x earnings. Strong growth ahead, good balance sheet, lots of free cash. No dividend. (Analysts’ price target is $281.30)

Any company involved in logistics is a winner in a supply chain crisis. Zebra helps clients keep track of inventory, employees, equipment, medical supplies and data. They delivered a great quarter earlier this month, including organic growth, because of strong demand. Shares are flirting with all-time highs.

Allan Tong’s Discover Picks In terms of metrics, Zebra’s earnings, returns and margins blow away its peers. For instance, its ROI of 21% is double the industry’s and its gross margin of 46.94% beats the wider 32.15% figure. However, Zebra’s PE of 36.9x is slightly ahead of the industry’s 34.9%. Read 3 Long Term Growth Stocks for our full analysis.

(A Top Pick May 11/20, Up 104%) Beat consensus by 10%. Guidance of 20% sales growth. Benefitting from structural change in e-commerce. Can continue to grow market share. Continues to like the story.

Helps clients tracks people and equipment, used in logistics. They reported a strong top and bottom-line beat with strong guidance two weeks ago. Doesn't hurt that their technology tracks Covid test samples and helps keep people distanced. Now, they'll be involved in cold storage of vaccines during the distribution phase.

Allan Tong’s Discover Picks Zebra’s PE is 36x, though that has climbed from 27x since the end of June. It’s currently trading at all-time highs, but there’s still growth ahead for this little-known name as e-commerce trends will endure beyond the pandemic. Among analysts, ZBRA stock boasts four strong buys, two buys and five holds, and has suffered only one analyst downgrade this year (from overweight to neutral). It’s beaten three of its last four quarters. Read 3 Forgotten Undervalued Stocks: ZBRA Stock, MFC Stock and BBBY Stock for our full analysis.

A great company. Buy it as the stock falls down this month as investors divest current tech names to buy red-hot tech IPOs.

Asset tracking is becoming much more important. It has great growth opportunities over the next little while. They compete with Honeywell. ZBRA-Q has a lot of products that the Chinese manufacture for them, which is a little bit of a risk short term. It trades at about 19 times. It is a really well run company. It plays into automation megatrends around the world. (Analysts’ price target is $240.63)