Here's Why You Should Avoid Zebra Technologies (ZBRA) Now
Zebra Technologies Corporation ZBRA has failed to impress investors with its recent operational performance due to low demand across end markets and foreign currency headwinds. These factors are likely to impede ZBRA’s earnings in the quarters ahead.
Let’s discuss the factors that might continue taking a toll on this Zacks Rank #5 (Strong Sell) company.
Business Weakness: Weakness in the printing end market is affecting the Asset Intelligence and Tracking segment’s performance. Revenues from the unit declined 1.7% in the second quarter of 2023. Significant weakness in the mobile computing market has been weighing on the Enterprise Visibility & Mobility segment, revenues from which declined 24.6% year over year in the second quarter of 2023.
Softness in End Markets: Low demand across end markets, particularly in the retail and e-commerce and transportation logistics markets, is taking a toll on Zebra Technologies’ operations. Also, reduced consumer spending, thanks to interest rate hikes, has been weighing on the company’s operations. Due to these headwinds, as well as significant reduction in demand in the mobile computing market, Zebra Technologies has provided a bleak forecast for the third quarter of 2023 and the full year. For the third quarter, ZBRA expects a 30-35% drop in net sales from the year-ago reported quarter. For 2023, the company expects net sales to decline 20-23% from the year-ago period.
Forex Woes: Given its widespread presence in international markets, Zebra Technologies is exposed to unfavorable foreign currency movements. The foreign-currency translation had an adverse impact of 2.5% on sales in the first half of 2023. For the third quarter and the full year, the company expects a negative impact of 1 percentage point each from currency headwinds on its sales.
Southbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for ZBRA’s 2023 earnings has been revised 30.3% downward.
Price Performance: Shares of the company have declined 15.6% in the past year against the industry’s 5.1% increase.
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CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 11.1% for 2023. The stock has gained 48.5% in the past year.
Eaton Corporation plc ETN currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of approximately 3%, on average.
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A. O. Smith Corp. AOS presently carries a Zacks Rank of 2. AOS’ earnings surprise in the last four quarters was 10.5%, on average.
In the past 60 days, estimates for A. O. Smith’s earnings have increased 2.9% for 2023. The stock has gained 27.4% in the past year.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
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A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Zebra Technologies Corporation (ZBRA) : Free Stock Analysis Report
