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Valued at a market cap of $20.9 billion, Zebra Technologies Corporation (ZBRA) provides enterprise asset intelligence solutions in the automatic identification and data capture solutions (AIDC) industry. The Lincolnshire, Illinois-based company designs, manufactures, and sells a broad range of AIDC products, including mobile computers, barcode scanners and imagers, specialty printers for barcode labeling, real-time location systems (RTLS), and related software applications.
Shares of this mobile computing company have significantly outpaced the broader market over the past 52 weeks. ZBRA has soared 75.3% over this time frame, while the broader S&P 500 Index ($SPX) has gained 31.8%. Moreover, on a YTD basis, the stock is up nearly 48.5%, compared to SPX’s 25.8% gains.
Narrowing the focus, ZBRA’s outperformance looks even more pronounced when compared to the Technology Select Sector SPDR Fund’s (XLK) 25.6% gain over the past 52 weeks and 20.3% return on a YTD basis.
On Oct. 29, ZBRA’s shares jumped 5.8% after its strong Q3 earnings release. The company’s adjusted earnings increased by a staggering 301.1% to $3.49 per share and exceeded the Wall Street estimates of $3.24. Its revenue climbed 31.3% year-over-year to $1.25 billion and surpassed the consensus estimates of $1.21 billion.
Moreover, its adjusted gross margin and adjusted EBITDA margin expanded by 430 and 980 bps, respectively, while its operating expenses decreased by 3.9% annually to $422 million. This was primarily driven by ZBRA’s effective restructuring actions and strong growth across both of its segments.
For the current fiscal year, ending in December, analysts expect ZBRA’s EPS to increase nearly 40.8% year over year to $12.40. The company’s earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the 15 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on eight “Strong Buy,” one “Moderate Buy,” five “Hold,” and one “Strong Sell” rating.
On Oct. 31, Barclays maintained an “Equal-Weight” rating on ZBRA and raised its price target to $407, which indicates a marginal upside potential from the current levels.
The mean price target of $412.08 represents a slight 1.6% upside from ZBRA’s current price levels, while the Street-high price target of $451 suggests a modest upside potential of 11.1%.
