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Here's Why Turtle Beach is a Solid Choice for Investors Now

Zacks Equity Research
·4 min read

Shares of Turtle Beach Corporation HEAR have returned 65.1% in the past year against a 4.1% decline of the industry. Currently, the stock carries a Zacks Rank #2 (Buy) and has a VGM Score of A.



The San Diego, CA-based audio technology company delivered a trailing four-quarter positive earnings surprise of 41%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 52.7% upward over the past 60 days.

Business Drivers

Turtle Beach is a leading gaming audio and accessory brand that offers a wide range of gaming headsets. In 2019, the company acquired ROCCAT, a German PC peripherals maker. ROCCAT’s expertise aided Turtle Beach’s expansion into the $1.6-billion PC gaming headset market as well as the $1.3-billion PC gaming keyboard and mouse market. ROCCAT’s enhanced distribution channels across North America, Europe and Asia enabled Turtle Beach to offer its lineup of products to more gamers around the world.

In August, Turtle Beach announced that its July 2020 retail sales in North America were the highest July sales in its history, in terms of revenues and units. This was according to The NPD Group’s (U.S.-based market research company) sales data. The company recorded its highest unit share ever for July, with more than 50% of all console headsets sold in the month being its headsets.

The company’s bestselling Recon 70 series wired headsets along with the recently introduced Stealth 700 Gen 2 and Stealth 600 Gen 2 wireless gaming headsets are likely to allow it to retain its leading position in 2020 and beyond. Turtle Beach’s new Stealth 700 Gen 2 and Stealth 600 Gen 2 are the first cross-generation console headsets designed to work with Xbox One and Xbox Series X as well as PlayStation 4 and PlayStation 5.

From being the leader in console gaming headsets, the company intends to become a top gaming accessory brand for all platforms. It is well positioned to benefit from a solid product performance combined with market share gains, supported by innovation, quality products, strong brand and retail partnerships.

Moreover, Turtle Beach’s headsets are suited for learning and working remotely via video or audio conferencing, resulting from the COVID-19 situation. The combination of increased gaming activity, distance learning and work-from-home trends should continue to drive higher demand for headsets. The company’s ability to significantly increase its production and delivery capacity along with gain in market share is impressive.

2020 Outlook

Turtle Beach raised its outlook for 2020. The company expects revenues to be around $300 million, which is more than 30% higher than the midpoint of its previous estimated range of $224-$234 million. Adjusted EBITDA is anticipated to be almost $30 million or more than 160% above the midpoint of the prior range of $9-$14 million.

Other Key Picks

Some other top-ranked stocks in the broader industry are Corning Incorporated GLW, Vocera Communications, Inc. VCRA and Acacia Communications, Inc. ACIA, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Corning delivered a trailing four-quarter positive earnings surprise of 39.9%, on average.

Vocera delivered a trailing four-quarter positive earnings surprise of 70%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.

Acacia pulled off a trailing four-quarter positive earnings surprise of 17%, on average. The company’s earnings topped the consensus estimate in three of the last four quarters.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

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