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Logitech (LOGI) to Post Q1 Earnings: What's in the Cards?

Zacks Equity Research

Logitech International S.A. LOGI is scheduled to report first-quarter fiscal 2020 results on Jul 22.

Notably, the company’s earnings beat estimates in each of the trailing four quarters, the average being 19.26%.

In the last reported quarter, the company’s adjusted earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 30 cents and also improved from the year-ago quarterly figure of 32 cents.

Moreover, net sales of $624.3 million also beat the consensus estimate of $619 million and rose 5% year over year as well. Revenues were up 9% at constant currency.

For the fiscal first quarter, the Zacks Consensus Estimate for revenues is pegged at $637.8 million, indicating 4.8% growth from the year-ago reported figure. The Zacks Consensus Estimate for earnings stands at 35 cents, implying a 2.94% rise from the prior-year reported number.

Logitech International S.A. Price and EPS Surprise

Logitech International S.A. Price and EPS Surprise

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

Let’s see how things are shaping up for the upcoming announcement.

Factors Likely to Drive Results

Logitech’s results in the fiscal first quarter are likely to be favored by strong growth across Gaming and Video Collaboration businesses. We believe, the company’s thriving cloud-based video-conferencing services and strategic product launches will continue to be key drivers.

Notably, the rising adoption of the company’s cloud-based video conferencing solutions is a major catalyst. During the quarter under review, the company launched the Logitech Sync video conferencing device management platform, designed to enable businesses monitor and manage several Logitech meeting room devices remotely.

Moreover, demand for its gaming products, attributable to the growing popularity of eSports, is likely to remain a tailwind.

Further, explosion of content creators is surging demand for applications in Logitech’s Creativity & Productivity segment. The worldwide PC market has shown signs of turnaround in the second quarter of 2019, per IDC and Gartner, making us optimistic about Logitech’s upcoming results.

However, weakness in the Smart Home segment due to stiff competition is a concern. Further, adverse currency volatility might be a persistent overhang on the company’s gross margins.

What Our Model Says

The proven Zacks model shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has maximum chances of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Logitech currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, its Earnings ESP of 0.00% makes surprise prediction difficult for the stock this time around.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

United States Cellular Corporation USM has an Earnings ESP of +15.66% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CGI Group, Inc. GIB has an Earnings ESP of +1.27% and a Zacks Rank #2.

NetEase, Inc. NTES has an Earnings ESP of +8.63% and is a Zacks #2 Ranked player.

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