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A month has gone by since the last earnings report for Logitech (LOGI). Shares have added about 11.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Logitech due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Logitech Beats on Q4 Earnings, Raises FY22 Outlook
Logitech 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’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.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -10% due to these changes.
At this time, Logitech has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Logitech has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Logitech International S.A. (LOGI) : Free Stock Analysis Report
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