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A month has gone by since the last earnings report for Logitech (LOGI). Shares have lost about 12.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Logitech due for a breakout? 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's Q2 Earnings Beat Estimates, FY21 View Up
Logitech reported second-quarter fiscal 2021 results, wherein both bottom and top lines surpassed estimates. Non-GAAP earnings came in at $1.87 per share, surpassing the Zacks Consensus Estimate by a whopping 206.6%. The bottom line also improved from the year-ago quarter’s 50 cents.
Net sales of $1.26 billion surpassed the consensus mark of $841.1 million, and surged 75% year over year in dollars and 73% at constant currency.
Logitech has been benefiting from increased demand for its Video Collaboration tools mainly driven by the rising 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 pandemic-led stay-at-home environment.
Logitech’s Gaming segment sales soared 85% year over year to $297.7 million. Video Collaboration sales skyrocketed 164% year over year to $236.7 million. Audio & Wearables segment sales jumped 68% year over year to $114.3 million.
Revenues from Pointing Devices increased 27% year over year to $169.1 million. Keyboards & Combos sales grew 45% to $2016 million. Revenues from PC Webcams were up a whopping 256% to $102.5 million, while Tablet and Other Accessories sales surged 145% to $83.1 million.
However, Mobile Speakers’ sales fell 24% to $43.6 million. The Smart Home segment sales declined 9% year over year to $8.6 million. The Other segment revenues declined 19% to $21,000 during the fiscal second quarter.
Margins & Operating Metrics
Non-GAAP gross profit jumped more than two folds to $574.3 million from the year-ago quarter’s $276.5 million. Non-GAAP gross margin expanded 730 basis points (bps) from the prior-year quarter to 45.7%.
Non-GAAP operating expenses flared up 18% to $220.8 million.
Non-GAAP operating income soared nearly three-fold to $353.5 million from the $89.4 million reported in the year-ago quarter. Operating margin advanced 15.7 percentage points to 28.1%.
As of Sep 30, 2020, Logitech’s cash and cash equivalents were $917.2 million compared with the $809.4 million recorded in the previous quarter.
Additionally, the company generated operating cash flow of $279.7 million during the fiscal second quarter compared with the prior quarter’s $118.8 million. During the first-half of fiscal 2021, the company generated $398.5 million.
Logitech has raised its view for fiscal 2021. The company now expects non-GAAP operating income of $700-$725 million compared with the previously-guided range of $410-$425 million.
Revenues are now anticipated to be up 35-40% year over year at constant currency, instead of the earlier forecast of a 10-13% increase.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 41.25% due to these changes.
At this time, Logitech has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Logitech has a Zacks Rank #1 (Strong 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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