Zebra (ZBRA) Q1 Earnings & Revenues Surpass Estimates

Zebra Technologies Corporation ZBRA reported solid first-quarter 2022 results, with earnings and sales surpassing estimates by 4.7% and 4.2%, respectively.

ZBRA’s adjusted earnings per share in the reported quarter came in at $4.01, outpacing the Zacks Consensus Estimate of $3.83. The bottom line decreased 16.3% on a year-over-year basis.

Revenue & Segmental Performance

In the first quarter, Zebra generated net sales of $1,432 million, reflecting a year-over-year increase of 6.3%. The improvement was driven by a 5.4% increase in organic sales, 0.1% gain from movements in foreign currencies and acquisitions had an adverse impact of 1%. The top line surpassed the Zacks Consensus Estimate of $1,374 million.

ZBRA reports revenues under the segments discussed below:

Revenues from the Asset Intelligence & Tracking segment were $394 million, down 8.2% year over year. The decrease was driven by an 8.1% fall in organic sales and a 0.1% gain from movements in foreign currencies.

The Enterprise Visibility & Mobility segment’s revenues were $1,038 million, up 12.7% year over year. The results benefited from 11.6% growth in organic sales and a 0.1% gain from movements in foreign currencies. However, acquisitions had an adverse impact of 1.2%.

Zebra Technologies Corporation Price, Consensus and EPS Surprise

Zebra Technologies Corporation price-consensus-eps-surprise-chart | Zebra Technologies Corporation Quote

Margin Profile

In the first quarter, Zebra’s cost of sales totaled $795 million, reflecting a rise of 14.9% from the year-ago quarter’s level. Total operating expenses were $425 million, up 11%.

Net income in the reported quarter decreased 10.1% year over year to $205 million while adjusted margin declined 260 basis points to 14.3%.

Balance Sheet and Cash Flow

Exiting the first quarter, Zebra had cash and cash equivalents of $141 million, down 57.5% from $332 million recorded at the end of the prior quarter. Long-term debt was down 1% sequentially to $913 million.

In the first three months of 2022, ZBRA generated net cash of $54 million from operating activities compared with $224 million in the previous year. In the first three months of 2022, its net debt borrowings totaled $105 million, and interest payments were $8 million. Capital expenditure was $14 million. Free cash flow was $40 million compared with $214 reported in the year-ago quarter.

In the first three months of 2022, Zebra repurchased shares worth $305 million.

Outlook

For the second quarter of 2022, Zebra estimates adjusted net sales to grow 3-7% on a year-over-year basis. Adjusted earnings are projected in the range of $4.05-$4.35. Adjusted effective tax rate is likely to be about 18%.

For 2022, Zebra anticipates adjusted net sales to grow 3-7% year over year. It expects free cash flow to be minimum $800 million.

Zacks Rank & Other Stocks to Consider

With a market capitalization of $20 billion, ZBRA currently carries a Zacks Rank #2 (Buy).

Some other top-ranked companies from the industrial products sector are discussed below.

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1. AIT delivered a trailing four-quarter earnings surprise of 25.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AIT’s earnings estimates have increased 5.4% for fiscal 2022 (ending June 2022) in the past 60 days. Its shares have increased 3.7% in the past three months.

Roper Technologies, Inc. ROP presently has a Zacks Rank of 2. Its earnings surprise in the last four quarters was 2%, on average.

In the past 60 days, ROP’s earnings estimates have increased 1.1% for 2022. The stock has decreased 0.4% in the past three months.

Ferguson plc FERG is presently Zacks #2 Ranked. FERG’s earnings surprise in the last four quarters was 14.2%, on average.

In the past 60 days, the stock’s earnings estimates have increased 6.5% for fiscal 2022 (ending July 2022). The same has declined 21% in the past three months.

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