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Logitech (LOGI) Beats on Q4 Earnings, Raises FY22 Outlook

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·5 min read
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Logitech International LOGI reported fourth-quarter fiscal 2021 results, wherein both bottom and top lines surpassed estimates. Non-GAAP earnings came in at $1.45 per share, surpassing the Zacks Consensus Estimate by 51%. The bottom line also improved from the year-ago quarter’s earnings of 42 cents per share.

Net sales of $1.54 billion outpaced the consensus mark of $1.16 billion, and surged 117% year over year in dollars and 108% at constant currency.

Logitech has been benefiting from elevated demand for its Video Collaboration tools, mainly driven by the surging work-from-home and learn-from-home trends. Also, the PC peripheral market is witnessing strong traction, which is aiding top-line growth.

Additionally, demand for gaming products has shot up on the growing popularity of online video games and eSports amid the stay-at-home scenario.

Logitech International S.A. Price, Consensus and EPS Surprise

Logitech International S.A. Price, Consensus and EPS Surprise
Logitech International S.A. Price, Consensus and EPS Surprise

Logitech International S.A. price-consensus-eps-surprise-chart | Logitech International S.A. Quote

Segmental Details

Logitech’s Gaming segment sales soared 117% year over year to $323 million. Video Collaboration sales skyrocketed 248% year on year to $385.7 million. Revenues from PC Webcams were up a whopping 261% to $144.8 million, while Tablet and Other Accessories sales surged 268% to $117.1 million.

The Audio & Wearables segment sales jumped an astounding 100% year over year to $130.2 million. Revenues from Pointing Devices increased 31% year over year to $177.7 million. Keyboards & Combos sales grew 48% to $219.2 million.

Mobile Speakers’ sales increased 40% to $29.7 million. The Smart Home segment sales inched up 1% year over year to $8.4 million. However, the Other segment revenues fell 14% year on year to $0.08 million during the fiscal fourth quarter.

Margins & Operating Metrics

Non-GAAP gross profit jumped more than two folds to $716.3 million from the year-ago quarter’s figure of $282.4 million. Non-GAAP gross margin expanded 680 basis points (bps) from the prior-year quarter to 46.6%.

Non-GAAP operating expenses flared up 92.2% to $391.2 million. Nonetheless, as a percentage of revenues, non-GAAP operating expenses decreased to 25.5% from the year-ago quarter’s figure of 28.7%.

Non-GAAP operating income soared more than four-fold to $325.1 million from the $79 million reported in the year-ago quarter. Operating margin advanced 10.1 percentage points to 21.2%.

Liquidity and Shareholders’ Return

As of Mar 31, 2021, Logitech’s cash and cash equivalents were $1.75 billion compared with the $1.39 billion recorded in the previous quarter. Additionally, the company generated operating cash flow of $530.2 million during the fiscal fourth quarter. During fiscal 2021, the company generated $1.46 billion of cash flow from operating activities.

Concurrent with the fiscal fourth-quarter results, Logitech announced that its board of directors has increased the share-repurchase authorization limit to $1 billion from the $250 million authorized previously. Under the current authorization, the company has bought back $165 million worth of its common stocks. Therefore, the company has now $835 million remaining total authorization after the increase, which it required to complete through July 2023.

Additionally, Logitech’s board of directors has approved a proposal for fiscal 2021 dividend, which will be 10% higher than the dividend paid in fiscal 2020.

During the fourth quarter of fiscal 2021, the company repurchased shares worth $92.2 million. In fiscal 2021, it paid $146.7 million in dividend and bought back $165 million worth of common stocks.

Fiscal 2022 Operating Income Guidance Up

Logitech has raised its non-GAAP operating income view for fiscal 2022. The company now projects non-GAAP operating income between $800 million and $850 million compared with the previously-guided range of $750-$800 million.

However, the company reiterated its expectations for revenues. It still estimates sales to remain flat (+/- 5%) year over year in constant currency.

Zacks Rank and Stocks to Consider

Logitech currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other top-ranked stocks in the broader technology sector include Lam Research Corporation LRCX, Micron MU and NVIDIA NVDA. While Lam Research and Micron sport a Zacks Rank #1, NVIDIA carries a Zacks Rank #2 (Buy) at present.

The long-term earnings growth rate for Lam Research, Micron, and NVIDIA is currently pegged at 32.8%, 15.7% and 15.1%, respectively.

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Logitech International S.A. (LOGI) : Free Stock Analysis Report

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