Zebra Technologies, a maker of enterprise systems for managing inventory and assets, on Tuesday beat analyst estimates for the second quarter. It also guided above views for the current quarter and full year. Zebra stock jumped on the news and moved out of a buy zone.
The Lincolnshire, Ill.-based company earned an adjusted $3.18 a share on sales of $1.22 billion in the June quarter. Analysts polled by FactSet had predicted earnings of $2.80 a share on sales of $1.18 billion. On a year-over-year basis, Zebra earnings declined 3.3% while sales edged up 0.2%.
With its Q2 results, Zebra returned to sales growth after five consecutive quarters of decline on a year-over-year basis. However, earnings dropped for the sixth straight quarter.
For the current quarter, Zebra expects to earn an adjusted $3.15 a share on sales of $1.21 billion. That's based on the midpoint of its guidance. Wall Street was modeling earnings of $3.05 a share on sales of $1.19 billion in the third quarter. In the year-earlier period, Zebra earned an adjusted 87 cents a share on sales of $956 million.
For the full year, Zebra forecast adjusted earnings of $12.60 a share on sales of $4.84 billion, based on the midpoint of its outlook. Analysts were looking for earnings of $12.09 a share on sales of $4.78 billion. In 2023, Zebra earned an adjusted $9.82 a share on sales of $4.58 billion.
Zebra Stock Climbs After Q2 Report
On the stock market today, Zebra stock surged 3.9% higher to close at 348.12.
On July 11, Zebra stock broke out of a cup base at a buy point of 328.70, according to IBD MarketSurge charts. It then trended sideways. The 5% buy zone extends to 345.14, based on IBD trading principles.
Investors could view the shallow cup base as a handle to a 45% deep base going back to February 2023.
Zebra Technologies makes rugged mobile computers, bar code scanners and printers, and RFID tracking tags that link to enterprise systems to enable real-time visibility of inventory and other assets. It offers systems for retail, e-commerce, health care, manufacturing, transportation and other industries.
"Our increased full-year outlook reflects our second-quarter performance and early signs of momentum in demand led by mobile computing, balanced with continued cautious customer spending behavior, particularly for large orders, which have not yet returned to historical levels," Chief Executive Bill Burns said in a news release.
He added, "We continue to be well positioned to advance our industry leadership with our innovative solutions that digitize and automate our customers' workflows across the supply chain."
ZBRA Stock Called 'Top Pick'
In an interview with Investor's Business Daily, Chief Financial Officer Nathan Winters described the business climate as stable but with some uncertainty tied to high interest rates and the overall economy.
"We expect to see double-digit, broad-based growth in the second half of the year," he said, citing the current sales momentum and easier year-over-year comparisons.
TD Cowen analyst Joe Giordano reiterated his buy rating on Zebra stock with a price target of 375. In a client note, Giordano said Zebra remains a "top pick."
"We believe momentum will continue as strong execution and financial performance have played out despite a lack of large orders as customers remain cautious on spend," Giordano said. "True market upside remains additive to current guidance."
Zebra stock ranks eighth out of 35 stocks in IBD's Electronics-Miscellaneous Products industry group, according to IBD Stock Checkup. Zebra has an IBD Composite Rating of 70 out of 99.
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