Logitech (LOGI) to Report Q2 Earnings: What's in the Offing?
Logitech International LOGI is slated to report second-quarter fiscal 2024 results on Oct 23.
The Zacks Consensus Estimate for second-quarter fiscal 2024 revenues is pegged at $978.4 million, indicating a decrease of 14.8% from the year-ago quarter. The consensus mark for non-GAAP earnings stands at 66 cents per share, suggesting a significant decline of 21.4% year over year. Earnings estimate for the second quarter has remained unchanged in the past 30 days.
The company’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters and missed on one occasion, the average surprise being 15.1%.
Let’s see how things have shaped up before the upcoming announcement.
Logitech International S.A. Price and EPS Surprise
Logitech International S.A. price-eps-surprise | Logitech International S.A. Quote
Factors to Consider
Logitech’s fiscal second-quarter earnings are likely to have been negatively impacted by the weakened demand for personal computers (PCs), the main sales booster for its PC peripheral products. Per the latest Gartner report, worldwide PC shipments declined 9% year over year to 64.3 million units in the third quarter of 2023.
In 2020 and 2021, Logitech benefited from the elevated demand for its Video Collaboration, PC Webcams, Keyboards & Combos and Pointing Device tools, mainly driven by the heightening of work-from-home and learn-from-home trends.
However, the weakening global economy amid ongoing macroeconomic and geopolitical issues enhanced global recessionary concerns, thereby prompting enterprises to postpone their large IT spending plan. Furthermore, continued industry layoffs due to growing recessionary concerns are hampering the demand for PC peripheral products by organizations.
Additionally, a lack of the need for product refreshes is expected to have negatively impacted the demand for Logitech’s products in the to-be-reported quarter. The majority of the global working population refreshed PCs and related peripheral products about two years ago in the wake of the pandemic-led work-from-home trend.
Our estimates for Logitech’s Video Collaboration, PC Webcams, Keyboards & Combos and Pointing Device second-quarter revenues are pegged at $141 million, $76.4 million, $173.7 million and $164.6 million, respectively. The estimated revenue figures for Video Collaboration, PC Webcams, Keyboards & Combos and Pointing Device depict a year-over-year decline of 21.2%, 25.1%, 13.5% and 11.1%, respectively.
Additionally, the softened demand for gaming products and accessories is likely to have hurt Logitech’s Gaming category’s performance in the second quarter. The demand for gaming products shot up due to the growing popularity of online video games and eSports amid the stay-at-home scenario during the pandemic. However, the demand softened due to the reopening of economic and business activities. Our estimate suggests the company’s Gaming revenues will decline 19.6% year over year to $259 million in the to-be-reported quarter.
Furthermore, declining consumer spending amid high inflation and interest rates is likely to have hurt the demand for Logitech’s Headsets. Our estimate of $40.2 million for Headsets revenues implies a decline of 10.6%. However, we expect revenues from the Tablet & Other Accessories business unit to surge 13.8% to $61.7 million.
However, the company’s cost-saving initiative, which includes headcount reduction, is likely to have partially offset the negative impacts of the aforementioned factors on profitability.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for LOGI this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though Logitech carries a Zacks Rank #2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, Vertiv VRT, Intel INTC and ON Semiconductor ON have the right combination of elements to post an earnings beat in their upcoming releases.
Vertiv carries a Zacks Rank #2 and has an Earnings ESP of +1.82%. The company is scheduled to report third-quarter 2023 results on Oct 25. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing on one occasion, with the average surprise being 25.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vertiv’s third-quarter earnings stands at 44 cents per share, indicating a year-over-year improvement of 91.3%. It is estimated to report revenues of $1.75 billion, which suggests an increase of approximately 18.3% from the year-ago quarter.
Intel is slated to report third-quarter 2023 results on Oct 26. The company has a Zacks Rank #2 and an Earnings ESP of +12.98% at present. Intel’s earnings beat the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average surprise being 130.9%.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 21 cents per share, suggesting a decrease of 64.4% from the year-ago quarter’s earnings of 59 cents. Intel’s quarterly revenues are estimated to decline 12.1% year over year to $13.48 billion.
ON carries a Zacks Rank #2 and has an Earnings ESP of +1.00%. The company is scheduled to report third-quarter 2022 results on Oct 30. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 8.7%.
The Zacks Consensus Estimate for ON’s third-quarter earnings is pegged at $1.35 per share, indicating a year-over-year decrease of 6.9%. The consensus mark for revenues stands at $2.15 billion, suggesting a year-over-year decline of 2.1%.
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