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Logitech (LOGI) Q4 Earnings Beat Estimates, Revenues Up Y/Y

Zacks Equity Research

Logitech International SA LOGI reported solid fourth-quarter fiscal 2019 results, wherein both the top line and the bottom line surpassed estimates and improved year over year.

Non-GAAP earnings came in at 38 cents per share, surpassing the Zacks Consensus Estimate of 30 cents. The bottom line also improved from the year-ago quarter figure of 32 cents.

Net sales of $624.3 million beat the consensus estimate of $619 million and rose 5% year over year. Revenues were up 9% in constant currency. Revenue growth stemmed from consistent strength in Gaming, Video Collaboration, and Creativity & Productivity businesses.

Segmental Details

Logitech’s Gaming segment jumped 9% year over year to $137.6 million. Meanwhile, Video Collaboration grew 27% to $69.4 million.

Mobile Speakers business showed significant improvement after a disappointing fiscal third quarter, and surged 62% to $22.7 million. Audio & Wearables segment also witnessed 18% year-over-year growth.

However, Smart Home segment put up a disappointing show. Sales in this segment plunged 28% to $11.5 million.

Logitech’s Creativity and Productivity business comprises four sub-business lines — Keyboards and Combos, Pointing Devices, PC Webcams, and Tablet and Other Accessories. Apart from Pointing Devices, which grew 1% year over year, each of the other lines registered decline. Keyboards & Combos fell 3%, PC Webcams dived 4%, and Tablet & Other Accessories plunged 14%.

Notably, the Other segment, whose products the company is currently in the process of transitioning out of, registered a whopping 377% surge in the reported quarter.

Margins & Operating Metrics

Non-GAAP gross profit rose 3.9% year over year to $237.2 million. Non-GAAP gross margin increased 160 basis points (bps) to 38%,

Non-GAAP operating expenses jumped 7.8% to $173.1 million.

Non-GAAP operating income climbed 16.3% to $64.1 million. Operating margin of 10.3% expanded 100 bps from the year-ago quarter.

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

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

Liquidity

As of Mar 31, 2019, Logitech’s cash and cash equivalents were $604.5 million compared with $584.5 million in the previous quarter.

Additionally, the company generated operating cash flow of $31.7 million in the fiscal fourth quarter compared with $176.2 million in the prior quarter.

Full-Year Highlights

For full-year fiscal 2019, Logitech recorded the sixth consecutive year of growth. Revenues of $2.8 billion grew 9% year over year. The top-line growth was 10% in constant currency year over year. Notably, the rise came within the company’s guided range.

Non-GAAP operating income increased 23% to $352 million. Non-GAAP earnings jumped 26% to $2.01 per share, compared with $1.6 a year ago.

Guidance

Logitech provided view for fiscal 2020. The company expects the non-GAAP operating income to be $375-$385 million.

Revenue growth is anticipated within mid-high single digits in constant currency.

Zacks Rank and Other Key Picks

Logitech currently has a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the broader Computer and Technology sector are CACI International, Inc. CACI, Cadence Design Systems, Inc. CDNS and Verint Systems Inc. VRNT, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for CACI, Cadence and Verint is projected to be 10%, 12% and 11%, respectively.

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