Zebra Technologies, a maker of enterprise systems for managing inventory and assets, on Tuesday beat analyst expectations for the third quarter and guided higher than views for Q4. Zebra stock surged on the news.
The Lincolnshire, Ill.-based company earned an adjusted $3.49 a share on sales of $1.255 billion in the September quarter. Analysts polled by FactSet had expected Zebra earnings of $3.23 a share on sales of $1.217 billion. On a year-over-year basis, Zebra earnings soared 301% while sales jumped 31%.
With its Q3 results, Zebra returned to earnings growth after six consecutive quarters of declines on a year-over-year basis. Sales rose for the second straight quarter.
For the current quarter, Zebra expects to earn an adjusted $3.90 a share on sales of $1.31 billion. That's based on the midpoint of its guidance. Wall Street was modeling earnings of $3.53 a share on sales of $1.25 billion. In the year-earlier period, Zebra earned an adjusted $1.71 a share on sales of $1.01 billion.
"We have increased our full-year outlook for profitable growth to reflect our recent performance and continued momentum in demand," Chief Executive Bill Burns said in a news release. "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."
On the stock market today, Zebra stock rose 5.8% to close at 384.68. Earlier in the session, it hit a 30-month high of 394.57.
Zebra Infusing Offerings With AI
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.
Chief Financial Officer Nathan Winters said Zebra has seen an improvement in customer spending in most of its vertical markets. Retail and e-commerce are "leading the charge," he told Investor's Business Daily.
Meanwhile, Zebra is adding artificial intelligence technologies to its products to add value for its customers. Data collected by Zebra's inventory and asset monitoring tech can be used in AI models to generate useful insights, Winters said.
Also, Zebra is developing "an AI companion or a digital assistant for frontline workers" who use its handheld computers, he said. Those devices will assist workers with sales, merchandising, operating procedures and other things, Winters said.
Zebra Stock Returns To Buy Zone
Zebra stock has been flirting with a buy zone since Sept. 26 when it touched a buy point of 372.93 from an eight-week consolidation period, according to IBD MarketSurge charts. Trading volume was light that day and the breakout failed. But since then, Zebra stock has been moving in and out of the 5% buy zone while staying above the stop-loss sell zone.
TD Cowen analyst Joe Giordano called Zebra stock his "top overall idea" in the diversified industrials and automation sector in an Oct. 16 report. He rates Zebra stock as buy with a price target of 380.
Zebra stock ranks sixth out of 34 stocks in IBD's Electronics-Miscellaneous Products industry group, according to IBD Stock Checkup. ZBRA stock has an IBD Composite Rating of 65 out of 99.
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