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Zebra (ZBRA) Q3 Earnings & Revenues Beat Estimates, Up Y/Y

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Zebra Technologies Corporation ZBRA reported solid third-quarter 2021 results, with earnings and sales surpassing estimates by 14.3% and 3%, respectively.

The company’s adjusted earnings per share in the reported quarter came in at $4.55, outpacing the Zacks Consensus Estimate of $3.98. The bottom line also increased 39.1% on a year-over-year basis.

Revenues & Segmental Performance

In the third quarter, Zebra generated net sales of $1,436 million, reflecting a year-over-year increase of 26.9%. The improvement was driven by a 23.2% increase in organic sales, a 1.3% contribution from acquisitions, and a 2.4% gain from movements in foreign currencies. The top line surpassed the Zacks Consensus Estimate of $1,395 million.

The company reports revenues under the segments discussed below:

Revenues from the Asset Intelligence & Tracking segment were $386 million, up 13.9% year over year. The increase was driven by a 12.1% growth in organic sales and a 1.8% gain from movements in foreign currencies.

The Enterprise Visibility & Mobility segment’s revenues were $1,050 million, up 32.1% year over year. The results benefited from 27.9% growth in organic sales, 1.6% benefits from acquisitions, and a 2.6% gain from movements in foreign currencies.

Zebra Technologies Corporation Price, Consensus and EPS Surprise

Zebra Technologies Corporation Price, Consensus and EPS Surprise
Zebra Technologies Corporation Price, Consensus and EPS Surprise

Zebra Technologies Corporation price-consensus-eps-surprise-chart | Zebra Technologies Corporation Quote

Margin Profile

In the third quarter, Zebra’s cost of sales totaled $790 million, reflecting a rise of 23.6% from the year-ago quarter. Total operating expenses in the quarter were $409 million, reflecting an increase of 19.2%.

Net income in the reported quarter increased 71.6% year over year to $199 million while adjusted margin expanded 370 basis points to 13.9%.

Balance Sheet and Cash Flow

Exiting the third quarter, the company had cash and cash equivalents of $307 million, down 3.5% from $318 million recorded at the end of the prior quarter. Long-term debt was down 0.4% sequentially to $940 million.

In the first nine months of 2021, it generated net cash of $836 million from operating activities compared with $531 million in the year-ago period. In the same time frame, its net debt repayments totaled $256 million and interest payments were $25 million. Capital expenditure was $38 million. Free cash flow was $798 million, reflecting an increase of 65.6% from the year-ago period.

In the first nine months of 2021, the company repurchased shares worth $25 million compared with $200 million in the year-ago period.

Outlook

For the fourth quarter of 2021, Zebra estimates adjusted net sales to grow 8-12% on a year-over-year basis. Adjusted earnings are projected to lie in the range of $4.20 to $4.50. Adjusted effective tax rate is likely to be about 18%.

For 2021, the company expects free cash flow to be a minimum of $950 million.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Industrial Products sector are Alcoa Corporation AA, AZZ Inc. AZZ, and Franklin Electric Co., Inc. FELE. While Alcoa and AZZ currently sport a Zacks Rank #1 (Strong Buy), Franklin Electric carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alcoa delivered an earnings surprise of 39.77%, on average, in the trailing four quarters.

AZZ delivered an earnings surprise of 25.47%, on average, in the trailing four quarters.

Franklin Electric delivered an earnings surprise of 16.27%, on average, in the trailing four quarters.


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